SMALL BUSINESS ADMINISTRATION
Small Business Investment Act of 1958, Title IV, Part B,
Sections 410 and 411, as amended, 15 U.S.C. 687 b and c, 15 U.S.C. 694 a and
b; Inspector General Act of 1978, 5 U.S.C. Appendix I, Public Law 100-590,
Title II; Public Law 101-574, Section 216.
To guarantee surety bonds issued by commercial surety
companies for small contractors unable to obtain a bond without a guarantee.
Guarantees are for up to 90 percent of the losses incurred and paid by
participating sureties if certain conditions are met.
TYPES OF ASSISTANCE:
Place Cursor Here for Definition
USES AND USE RESTRICTIONS:
Contracts of $1.250 million or less, where a surety bond is required but not
available privately without an SBA guarantee. Guarantee is limited to bid,
payment, and performance bonds (and ancillary bonds incidental to the
performance of a specific contract). Guarantee is provided directly to the
surety for a particular contract. Under the Prior Approval Program, sureties
must apply for each guarantee on a case-by-case basis. Sureties participating
in the Preferred Surety Bond (PSB) Program are empowered to issue, monitor and
service bonds, subject to SBA's guarantee, without prior SBA approval.
Guarantee covers up to 90 percent of surety's losses on that contract under
the Prior Approval Program and up to 70 percent of surety's losses under the
Applicant Eligibility: 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.
APPLICATION AND AWARD PROCESS:
Beneficiary Eligibility: A small contractor whose
gross receipts have been not more than $5,000,000 as averaged for the last 3
fiscal years; a manufacturer whose number of employees does not exceed the
small business standards specified in Small Business Size Regulations, Part 13
Code of Federal Regulations, Section 121.601 (13 CFR 121.601).
Credentials/Documentation: Application and
Pre-application Coordination: None. This program is
excluded from coverage under E.O. 12372.
Application Procedure: Small contractor must
apply directly to a surety agent/broker for a surety bond. Surety agent/broker
in turn acts for or contacts surety company to process the bond request. Under
the Prior Approval Program, surety company deals directly with appropriate SBA
Area Office regarding guarantee request. Area and district SBA offices also
serve as contact points for program information purposes. PSB sureties deal
directly with Headquarters.
Award Procedure: Under the prior approval
program, SBA notifies the surety company of SBA's approval of the requested
guarantee and furnishes company with written authorization. Surety company (or
agent/broker) notifies the bond applicant and issues bond. PSB sureties issue
guaranteed bonds without SBA's prior approval and notify SBA on a monthly
basis. Prior approval and PSB sureties remit 20 percent of their premium to
SBA. Contractor pays fees of $6.00 per thousand dollars of contract value to
Range of Approval/Disapproval Time: Within short
time if underwriting data complete, usually 1 to 5 days after receipt of
application from surety company.
Renewals: Not applicable.
Formula and Matching Requirements: Not applicable.
Length and Time Phasing of Assistance: Guarantee
runs to termination of bond (usually completion of contract).
POST ASSISTANCE REQUIREMENTS:
Reports: Monthly, Internal SBA Reports, SBA, as
requested, sends to participating sureties and other interested parties a
summary report on program activity.
Audits: SBA has the right to audit its accounts
with any participating surety. Each participating PSB surety must be audited
Records: SBA Headquarters maintains records on
contractors in default and/or claim status (including recoveries on paid
claims) as furnished by sureties. SBA Headquarters and each SBA Area Office
has information about SBA guaranteed contractors in that Area with SBA
Account Identification: 73-4156-0-3-376.
Obligations: (Guaranteed Surety Bonds) FY 01
$426,068,372; FY 02 est $1,672,000,000; and FY 03 est $1,672,000,000.
Range and Average of Financial Assistance:
Additional information available on SBA's website at www.sba.gov.
In fiscal year 2001, 10,445 bid bond applications were approved and 2,399
final bond guarantees were issued.
REGULATIONS, GUIDELINES, AND LITERATURE:
13 CFR 115.
Regional or Local Office:
See Regional Agency Offices. Applicants must contact a local agent or broker of surety bonds. General program particulars may be obtained from SBA Area Offices listed in Appendix IV of the Catalog of Federal Domestic Assistance under Small Business Administration.
Peter C. Gibbs 409 3rd Street, SW
8th Floor, Washington, District of Columbia 20416 Email: firstname.lastname@example.org Phone: 202-205-6548
Web Site Address:
EXAMPLES OF FUNDED PROJECTS:
CRITERIA FOR SELECTING PROPOSALS: