Understanding SBA Surety Bonds
Your Gateway to Securing Larger Contracts
Discover how SBA Surety Bonds can help your small business compete for and win larger contracts, ensuring your growth and success.
Frequently Asked Questions About SBA Surety Bonds
What is an SBA Surety Bond?
An SBA Surety Bond is a bond guaranteed by the U.S. Small Business Administration, which helps small businesses obtain necessary bonds that they might not qualify for through traditional surety markets.
Why do I need an SBA Surety Bond?
If you’re a small business looking to bid on contracts that require bonding but are having difficulty obtaining bonds, an SBA Surety Bond can help you compete for larger contracts and grow your business.
What types of bonds does the SBA guarantee?
The SBA guarantees bid bonds, performance bonds, payment bonds, and ancillary bonds, covering the most common types of contract surety bonds required in industries like construction, service, and supply.
How much does an SBA Surety Bond cost?
The cost includes the premium charged by the surety company and the SBA fee, which is $6 per $1,000 of the contract amount for the first $100,000, and $9 per $1,000 for amounts over $100,000.
How long does it take to get approved for an SBA Surety Bond?
For contracts up to $500,000 that qualify for the QuickApp program, decisions are often made within hours. Larger or more complex applications may take several days to a few weeks.
What is the maximum contract amount for an SBA-guaranteed bond?
The SBA can guarantee bonds for contracts up to $6.5 million, or up to $10 million for federal contracts awarded under specific conditions.
Do I need to be denied by other surety companies before applying for an SBA bond?
While formal denial is not required, you should have attempted and failed to obtain bonds through standard surety markets before seeking an SBA-guaranteed bond.
Can new businesses qualify for SBA Surety Bonds?
Yes, new businesses can qualify. The SBA program is often more flexible than traditional surety markets, but you must demonstrate the capability to perform the contract.
What happens if I default on an SBA-guaranteed bond?
If you default, the surety company may file a claim with the SBA to recover a portion of their losses, which could affect your ability to obtain bonds in the future and may result in other consequences.
Ready to Secure Your Bond?
Contact an SBA-approved surety company or agent today to begin your bond application process and take the next step towards securing larger contracts and growing your business.