Will Save Substantial Time and Money to Government and Industry
Surety bond companies associated with the U.S. Small Business Administration will now be able to file their claims and supporting documents electronically thanks to a significantly enhanced, web-based processing system launched by the SBA.
The new system, announced by SBA’s Office of Surety Guarantees, eliminates the need for costly, overnight shipments by surety companies, as well as paper handling, filing and storage costs for both the companies and SBA.
“This enhancement is a collaborative effort between the surety industry and SBA resulting in improved efficiency, reduction in cost to Sureties and creating an error free environment,” said Peter Gibbs, Deputy Director for the Office of Surety Guarantees.
Enable Small Businesses to Bid on Larger Contracts and Grow
A major revision in the U.S. Small Business Administration’s Surety Bond Guarantee (SBG) Program more than triples the eligible contract amount, from $2 million to $6.5 million, the Agency will guarantee on surety bonds for both public and private contracts.
What does this mean for small businesses trying to grow?
A Los Angeles subcontractor for example, was looking to take on bigger jobs and grow its business, but needed a much larger bond to bid on and get a contract that was larger than past work it had performed.
As a direct result of higher SBA guaranteed bond limits, companies like that California contractor can now experience continued growth in bonding capacity, employ more employees and improve revenue streams. And with that kind of growth and resulting experience on bigger jobs, such companies can bid on more federal construction contracts, build an even stronger management team, and set strategic plans for bigger contracts and expansion into larger markets.
WASHINGTON – The U.S. Small Business Administration has made regulatory changes to its Surety Bond Guarantee (SBG) program, including higher surety bond guarantee limits that will help construction and service sector firms secure larger contracts for work in areas impacted by disasters.
The changes are related to the Small Business Disaster Response and Loan Improvements Act of 2008, which increases the eligible amount for contracts or orders related to a major disaster area.
The changes, which were originally published as part of a Proposed Rule in The Federal Register in April 2010, are now final and include:
Surety bonding is primarily needed in the construction industry on publicly funded projects.
How can a public agency using the low-bid system in awarding public works contracts be sure the lowest bidder is dependable?
How can private sector construction project owners manage the risk of contractor failure?
A surety bond is considered a part of the insurance industry, but it shares some characteristics with the credit industry. The surety company's primary duty is not to lend the contractor money. Instead, the surety company uses its financial resources to stand behind, or back, the contractor's commitment and ability to complete a contract.