Surety Bond Guarantees
Program Funding
Annual program obligations reported to SAM.gov.
Program Objective
To guarantee surety bonds issued by Treasury listed surety companies for small businesses unable to obtain a bond under reasonable terms without an SBA guarantee. The guarantees range up to 90% and cover direct losses and expenses incurred by an SBA-approved participating surety should the small business default on the contract.
Eligibility
Eligible Applicants
- Small Business Person
Guarantees are limited to those surety companies holding certificates of authority from the Secretary of the Treasury as an acceptable surety for bonds on Federal contracts. Specific criteria apply to the Prior Approval and PSB Sureties.
Beneficiaries
- Small Business Person
For most contracts, a small business is eligible for bond guarantees issued by the surety bond program if it qualifies as a small business under Code of Federal Regulations Subpart 121, Size Eligibility Provisions and Standards. To learn more, visit www.sba.gov/size-standards.
How to Apply
Award Procedure
Under the Prior Approval Program, SBA notifies the surety company of SBA's approval of the guarantee and furnishes the surety with e-mail authorization. Surety company (or agent/broker) notifies the bond applicant and issues the bond. Preferred sureties issue bonds guaranteed by SBA without SBA's prior approval. Prior approval and PSB sureties remit a percent of the premium they charge small businesses to SBA. Small businesses pay SBA a fee based on the percentage of the contract price.
The goal for completing the review of a bond guarantee application is 4.5 days.
Program details & compliance
Description
To guarantee surety bonds issued by Treasury listed surety companies for small businesses unable to obtain a bond under reasonable terms without an SBA guarantee. The guarantees range up to 90% and cover direct losses and expenses incurred by an SBA-approved participating surety should the small business default on the contract.
Mission Categories
Primary: Small Business
Use of Funds
Allowed Uses
Contracts within eligibility parameters outlined under Code of Federal Regulations Subpart 115, Surety Bond Guarantee, where a surety bond is required but not obtainable privately with reasonable terms and conditions. Guarantee is for bid, payment, and performance bonds (and ancillary bonds incidental to the performance of a specific contract). It is provided directly to the surety and/or an authorized agent for a particular contract. Under the Prior Approval program, sureties must apply to SBA for each guarantee. Sureties in the Preferred Bond Program are delegated authority to issue, service, and monitor bonds without prior SBA approval.
Required Documentation
Application and supplement information.
Reporting & Compliance
Applicable 2 CFR 200 Subparts
- Subpart F — Audit Requirements