The Ultimate Guide to the SBA Surety Bond Guarantee Program

Have you applied for a surety bond but been declined by a surety carrier? Consider teaming up with a surety bond agent participating in the Small Business Administration’s Surety Bond Guarantee Program. An SBA surety bond agent acts as a liaison between your business and the SBA, helping you navigate the application process and increasing your chances of approval.


What is the Small Business Administration (SBA)?

The Small Business Administration (SBA) is not just a federal agency, it’s a dedicated ally for small businesses and entrepreneurs. The SBA’s mission is to provide comprehensive support, from financing and education to contracting and legal advice. They are committed to helping Americans succeed by offering a helping hand when they’re ready to start, build, or grow a business. Discover if your company is small enough to benefit from its resources with the SBA size standards tool


What is the SBA Surety Bond Program?

One problem small businesses and entrepreneurs face is the need for a surety bond to win contracts. However, the company must be established to qualify for most standard surety bond programs. Many public and private contracts require surety bonds guaranteeing the work will be completed. For example, a construction company bidding on a government contract or a technology startup seeking a contract with a large corporation may need a surety bond to secure the deal. 


Recognizing the challenges faced by small businesses and entrepreneurs, the Housing and Urban Development Act established the SBA Surety Bond Program. For over 50 years, the SBA bonding program has been a lifeline, providing bonding assistance for small businesses, significantly increasing their eligibility to compete for federal, state, and local government contracts.


How Does the Program Help?

Thanks to the SBA’s assistance, tens of thousands of contractors have obtained bonds that were not available from the standard surety marketplace. These success stories are a testament to the relief and support the SBA Surety Bond Guarantee Program can provide, helping small businesses and entrepreneurs secure the bonds they need to compete for and win contracts.  


The program reimburses surety carriers for up to 90% of losses they incur, allowing surety bond underwriters to expand their appetite for higher-risk bond requests. 



Opportunities with SBA Surety Bond Guarantees

SBA surety bonds are suitable for most individual bond requests of up to $14 million on federal projects and up to $9 million on non-federal projects. This applies to bid bonds, performance bonds, payment bonds, and stand-alone maintenance bonds.


The SBA Surety Bond Guarantee Program is a versatile tool that can be used for a wide range of projects, including joint ventures, design-build contracts, and environmental contracts such as asbestos remediation. This flexibility empowers small businesses and entrepreneurs in various industries, showing them that they are capable of taking on diverse projects with the support of the SBA.


SBA Surety Bond Guarantee Eligibility

If you have a small business with a small contract and meet the surety company’s qualifications, you may be eligible for the SBA Bond Surety Guarantee Program. These qualifications include being a US-based, for-profit entity owned by US citizens, having a maximum revenue of $19 million for subcontractors and $45 million for general and heavy highway/infrastructure contractors, and being classified as a small business based on the number of employees (with a maximum of 500).


It is important to note that this program has additional limitations and restrictions, but a qualified bonding agent can help you determine if you are eligible.


Basic Limitations

Three different bond limitations determine the maximum bond value that can be obtained.


The limit is $500,000 if you’re using a quick application. However, with this streamlined business bonding method, no corporate financials are required, and FICO credit scores as low as 600 may still qualify. Underwriting only requires the completion of SBA Form 990a.


Other limits are:

$3,000,000 with internal statements.

$6,500,000 with CPA-reviewed statements

$9 million /$14 million with CPA-audited statements


What Size Surety Bond Am I Eligible For?

In general, most surety underwriters will limit bonds for small businesses to no larger than ten times the available working capital. However, with the SBA, this amount has increased to 20 times. The SBA surety bond also includes bank lines of credit in the working capital calculation.


For example, a company with $100,000 of working capital and a $50,000 line of credit would have an underwriter without the SBA who would support bonds up to $1,000,000 (10 x $100,000). With the SBA, however, that same underwriter could support bonds up to $3,000,000 with the additional line of credit (20 x $150,000).


What If I Have a Poor Credit Score?

Contractor owners can have less than stellar credit scores and still qualify. Applicants can also have blemishes on their credit reports, including prior bankruptcies. 


Companies can also qualify if they lost money in the previous year, have negative equity, and even negative working capital (as long as they have availability in their bank line of credit).


The SBA program can be combined with other tools, including collateral and funds administration, allowing even more flexibility with underwriting.


Additional Restrictions and Stipulations

Even though this program provides valuable assistance to people who might not otherwise be able to secure contracts, it’s important to be aware of the strict terms and conditions and the limitations and exclusions that apply. Your surety agent will be able to guide you through the entire process and help you understand all the details. It is important to note even if you qualify for the SBA program, each carrier has its own underwriting criteria.


Here are some of the restrictions and stipulations to consider:

  • US-based, for-profit entities only, owned by US citizens.
  • Must be classified as a small business (including any subsidiaries and related companies). 
  • Currently, the maximum revenue for subcontractors is $19 million, and for general and heavy highway/infrastructure contractors, it is $45 million. This is calculated using the average of the last 3 or 5 years. Classification can also be based on the number of employees (maximum 500).
  • Owners cannot be imprisoned or under indictment for a felony. Background checks are excluded. Prior criminal history or felony conviction is not disqualifying (effective May 30, 2024).
  • Companies and owners cannot currently file for bankruptcy and must be current with taxes.
  • Bond requests can be, at most, two times the contractor’s largest completed job.
  • Accounting standards can be strict beyond the Quick Application program. Most importantly, a current work-in-progress schedule is required.
  • If the job has already begun, additional paperwork is required.
  • Liquidated (delay) damages must be explicitly stated at less than $5,000 daily. The Quick Application program requires liquidated damages to be less than $2,500 per day.
  • You cannot “cherry-pick” individual bonds from a standard program. This means contractors who utilize the SBA program typically continue to use it on future bonds, even if they are smaller or less risky.



A fee of 0.6% of the contract price is added to a surety’s base rate. While this rate typically means higher premiums than surety bonds outside of the SBA program, the SBA will return the fee if the bond is canceled or otherwise not issued. 


Authorized SBA Surety Bond Agents

Keep in mind that several surety carriers, such as Travelers, Liberty Mutual, RLI, Old Republic, Gray Surety, SOMPO, and Skyward Surety, have partnerships with the SBA. While most carriers can take advantage of this program, not every agent can access it. It’s important to find SBA surety companies that have authorized SBA surety bond agents available to assist. 


Contact an Authorized SBA Surety Bond Agent

Overall, the SBA Bond Guarantee Program is an effective tool for companies struggling to obtain bonds. However, it is not a fit for all companies. Applying for the program involves several steps, including determining eligibility, preparing the necessary documents, and working with a qualified bonding agent to submit your application. The benefits can be extraordinary with the help of a qualified bonding agent.


We are proud to be an authorized SBA surety bond agent at Evergreen Surety, offering fast and reliable commercial and construction bonds in Colorado and nationwide. With access to a wide range of surety carriers, including the SBA, we are dedicated to quickly finding the best surety bond for your business, helping you secure your next big contract.

Call our office today at 303-520-0249 to get started!

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