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The $10 Million Small Business Guarantee

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By Neetal Parekh on August 18, 2009 12:23 PM

The Small Business Administration (SBA) announced last month that it was extending surety bond guarantees to federal contracts of up to $10 million.  That's up $5 million from its previous threshold, implemented in March 2009 and slated to run through September 2010 on all public and private contracts. 

Does your small business qualify for the SBA's new surety bond guarantee? Here are some facts about the program.

  • The $10 million guarantee applies specifically to federal contracts.
  • SBA partners with surety companies to help small businesses secure bonding in the commercial marketplace, where the businesses would be unlikely to secure bonding on their own.
  • SBA provides a guarantee to surety companies of between 70 and 90 percent of the bond amount
  • SBA has established new size standards dictating what is considered a 'small business' for purposes of the program (see SBA's "What is a Small Business??")
  • The SBA will also protect the project owner in the scenario that his or her contractors default or fail to perform by guaranteeing payment, bid, and performance bonds.
  • The new SBA bond guarantees also apply to individual orders as well as contracts.
  • The SBA offers two surety bond guarantee programs: Prior Approval/SBG Program or Preferred/PSB Program.
  • Small businesses can view SBA's compilation of bond agencies by state for name and contact information of participating surety companies.

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