Maximizing the Benefits of the SBA Surety Bond Program


The SBA Surety Bond Guarantee program provides contractors with enormous advantages in both gaining bigger jobs through surety bonds issued and growing their bonding capacity. The SBA’s surety bond program offers the opportunity to do both, but many contractors don’t know how to maximize the advantages given and that’s an opportunity that shouldn’t be wasted. 

To better help California contractors take full advantage of the SBA advantage afforded to them, we’ve assembled some tips to guide you toward maximizing the bonding program.

What to Do Prior to Applying for the Surety Bond Guarantee Program

The SBA is unique in several ways, beyond allowing greater access to surety bonds, but one benefit in particular to maximize is how working capital is handled. A standard surety will multiply a contractor’s working capital by ten to determine their total bonding capacity. The SBA program, on the other hand, multiplies the contractor’s working capital by twenty or twice as much. This vastly increases your bonding capacity and allows you to bid on much larger projects.

One way to maximize the benefits of the Small Business Administration’s Surety Bond program is to establish a line of credit with the bank prior to applying for the bonding program. Unlike standard surety companies, the SBA adds the unused portion of your line of credit to your working capital. This means if you’re able, as an example, to get a $500,000 line of credit from the bank, that could give you up to a $10 million additional bonding capacity through the program.

Download the SBA Surety Bond Program Guide


Align with Experienced SBA Surety Professionals

The SBA Bond Guarantee program has many rules and guidelines that can be confusing to those who don’t spend a great deal of time with surety bonds, whether they be insurance agents or contractors attempting to navigate the Surety Bond Guarantee program themselves. Beyond needing a professional to apply to the program for you, a contractor would benefit immensely from having a surety expert with experience working in the Bond Guarantee program as compliance with the guidelines is essential.

By working with a surety agent that has extensive experience and knowledge about the SBA’s surety bond program, they not only can educate you on maximizing bonding but can ensure there aren’t any unnecessary delays and push the surety underwriter when appropriate to do so. An experienced surety agent also knows how to leverage the lenient underwriting to maximize the benefits to allow for bidding on jobs you may not be qualified for according to standard surety guidelines. As an example, the SBA has a rule that limits the size of a job a contractor can take on. The project can only be twice as big as the largest completed contract you’ve had, but by having a surety agent with experience and understanding of the program, they can get an exception from the SBA if the job is within your experience. Your surety agent can use the prior experience of the owner or key personnel to be permitted bonds for the project.

Get the Most Out of the Bond Guarantee Program

By maximizing the benefits of the SBA program you gain enormous advantages in building your company and securing bigger jobs, but that also means it’s easy to lose track of what projects you can successfully complete. It’s easy to take on more than your company can handle from either a cash flow standpoint or an operational one. There is a reason the Small Business Administration has rules and guidelines to limit what projects can be bid on under the program, to limit the risk of having eyes too big for your stomach. By the SBA multiplying your working capital by twenty and it applied to your bonding capacity, it’s easy to take on a project that can exhaust your resources.

This is another reason why having an experienced surety agent is key to maximizing the benefits of the SBA Surety Bond program, to not only use the program for all that it can be and ensure compliance but to pull you back from making a judgment error. We at CSBA have helped many contractors get the most out of the SBA, such as Buhler Commercial. We encourage you to read their success story which comes from being in the SBA program and aligning with our surety experts.

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.

Contact Commercial Surety

We want to know more about how we can help your construction company get the right contractor bond for your next project. Fill out the form below and one of our local expert bonding agents will be in touch with you shortly.

Thanks for contacting CSBA!

Scroll to Top