SBA Surety Bond Program Guide
At CSBA, we take pride in our expertise in surety bonds and bonding programs, helping California contractors secure the bonds they need while guiding them through the process to give their businesses a competitive edge.
The SBA Surety Bond Program is a great help to contractors!
The SBA Surety Bond Program is a valuable resource for contractors aiming to expand their bonding capacity, whether they are new to the field or have years of experience. However, navigating the program can sometimes feel challenging, with a complex application process and unclear instructions. To simplify this, we have developed a clear, user-friendly guide designed to help contractors successfully access and navigate the SBA Surety Bond Program.
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Introduction to the SBA Surety Bond Program
Below you’ll find answers to commonly asked questions about the SBA’s bond program and articles that can help you with the process, as well as whether or not the SBA bond program is the right program for you.
Download the SBA Surety Bond Program Guide
What is the Small Business Administration?
The SBA, or Small Business Administration, is an independent federal agency established in 1953 to support and protect the interests of small businesses. In 1971, the SBA launched the Surety Bond Guarantee Program to help small business contractors secure the bonding needed to bid on government contracts.
The SBA Surety Bond Program Explained
The SBA bonding program supports small contractors who may not qualify for traditional surety bonds, limiting their ability to grow and secure government contracts at federal, state, and local levels. Through this program, contractors can obtain bonding for projects up to a specified amount, with the SBA guaranteeing up to 90% of the liability to the surety company. This reduces the risk for bond providers and enables contractors to access essential bonding opportunities.
How Does the Surety Bond Program Work?
The SBA bond program guarantees surety companies up to 90% coverage of any losses on bonds issued to contractors in the program. By reducing liability, this guarantee lowers the risk for surety companies, allowing them to provide bonds to contractors who might not otherwise qualify.
To qualify for the SBA program, a contractor must work with a surety agent connected to participating surety companies. The application process is similar to other bond applications but includes an additional SBA-specific form. To participate, contractors must meet the SBA’s small business size standards, which can be found here:
The contractor must also perform at least 15% of the work themselves and certify that they are not currently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from transactions with any federal department or agency.
What is the Cost of the Bond Program?
Typically, the premium for a surety bond contract ranges from 1-3% of the contract amount. However, the SBA imposes an additional fee of 0.6% of the bond amount, which must be paid before the bond can be issued. There is no charge to apply for the program or for bid bonds.
SBA Bond Tips for Contractors
With a trusted partner, such as our surety experts at CSBA, the SBA bonding program can be a valuable resource for both new and seasoned contractors. Contrary to common misconception, the program is not limited to newer contractors. To help contractors in California explore all available options, we’ve created informative articles on key topics related to the SBA program.
Review the articles below to learn more and determine if the SBA bonding program is the right fit for you, or contact us to speak directly with a surety expert.