Surety Bond Guarantee Program
The Surety Bond Guarantee (SBG) Program was developed to provide increased bonding
opportunities to small Veteran and minority contractors to support contracting opportunities for
which they would not otherwise bid. If your small construction, service or supply
company bids or performs projects requiring surety bonds, the U.S. Small Business Administration
has a program that could help make you more competitive.
Small business contractors and manufacturers can overcome challenges they face in winning
government or private contracts by using the SBA’s Surety Bond Guarantee Program. A surety
bond is a three-way agreement between the surety company, the contractor and project
owner. The agreement with the SBA guarantees the contractor will comply with the terms and
conditions of the contract. If the contractor is unable to successfully perform the contract,
the surety assumes the contractor’s responsibilities and ensures that the project is
completed.
The SBA Surety Bond Guarantee Program covers four types of major contract surety bonds:
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Bid Bond – guarantees the project owner that the bidder will enter into the
contract and furnish the required payment and performance bonds.
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Payment Bond – guarantees the contractor will pay all persons who furnish labor,
materials, equipment or supplies for use on the project.
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Performance Bond – guarantees the contractor will perform the contract in
accordance with its terms, specifications and conditions.
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Ancillary Bond – bonds that are incidental and essential to the performance of the
contract.
The overall surety bond program has two programs:
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The Prior Approval Program – The SBA guarantees 80 or 90 percent of a surety’s
loss. Participating sureties must obtain SBA’s prior approval for each bond.
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The Preferred Surety Bond Program – Selected sureties receive a 70 percent
guarantee and are authorized to issue, monitor and service bonds without the SBA’s prior
approval.
Program eligibility requirements
In addition to meeting the surety company’s bonding qualifications, you must qualify as a
small business concern, as defined by SBA. For federal prime contracts, your company must meet
the small business size standard for the North American Industry Classification System (NAICS) Code
that the federal contracting officer specified for that procurement. For more information
about the Surety Bond Guarantee Program, visit
http://www.sba.gov/osg/
