SBA’s Surety Bond Guarantee Program

Raises Ceiling to $5 million

If your small construction, service or supply company bids or performs projects requiring surety bonds, the 

U.S. Small Business Administration has good news for you.

Under the American Recovery and Reinvestment Act, SBA can guarantee bonds on public and private contracts and subcontracts up to $5 million, and on federal contracts up to $10 million, if the contracting officer certifies that a bond guarantee is in the best interest of the government. The SBA program is for small 

businesses that otherwise cannot obtain bonds through standard commercial channels. The program extends 

through Sept. 30, 2010. The previous limit was $2 million.

Small business contractors and manufacturers can overcome challenges they face in winning public and 

private contracts by using the SBA’s Surety Bond Guarantee Program. Broadly speaking, a surety bond is a 

contract between the surety company and the contractor (principal) for the benefit of a third party – usually 

the project owner or another contractor. Under SBA’s program, SBA guarantees between 70 and 90 percent 

of the bond amount in the event the small business is unable to complete the contract.

The SBA Surety Bond Guarantee Program covers four types of major contract surety bonds:

Bid Bond – guarantees the project owner that the bidder will enter into the contract and furnish the required 

payment and performance bonds.

Payment Bond – guarantees the contractor will pay all persons who furnish labor, materials, equipment or 

supplies for use on the project.

Performance Bond – guarantees the contractor will perform the contract in accordance with its terms, specifications and conditions.

Ancillary Bond – bonds that are incidental and essential to the performance of the contract.

There are two surety bond guarantee programs:

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.

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. This means that for any contract, your company must meet the small business size 

standard for the North American Industry Classification System (NAICS) Code. For more information about 

SBA’s size standards go to: 

www.sba.gov/smallbusinessplanner/start/financestartup/SERV_ELIGIBILITY.html.
How to Apply

The SBA does not directly bond a contractor. The contractor chooses a surety company or a bonding agent 

who represents an SBA surety participant. An agent is an individual who has power-of-attorney to issue 

bonds on behalf of a surety. The contractor fills out the surety application and the required SBA forms, providing the agent with the required credit, capacity and character information. The agent then underwrites the 

application and decides whether to execute the bond with or without an SBA guarantee. To view the list of 

Participating Surety Companies and Agents go to www.sba.gov/osg/.

Costs

The cost to a contractor for a surety bond is called the “bond premium.” The SBA charges fees to both the 

contractor and the surety company. The SBA does not charge a fee for bid-bond guarantees.

In addition to the bond premium charged by the surety, the SBA currently charges the contractor a guarantee 

fee of $7.29 per thousand dollars of the guaranteed amount, and charges the surety 26 percent of the premium 

that the surety charges.

SBA Surety Bond Guarantee Area Offices can answer small business’s questions about the program and can 

provide small businesses with a list of surety companies in their states.

U.S. Small Business Administration • Recovery Act: Surety Bond Guarantee Program • 2

Denver Area Office

Supervisory Surety Bond Specialist

Darryl Bellamy

721 19th St., Suite 426

Denver, CO 80201-0660

Phone: 303/844-2607, ext.261

FAX: 303/844-5237

Geographic Territory: Colorado, Connecticut, Delaware, District

of Columbia, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, 

Massachusetts, Michigan, Minnesota, Missouri, Montana,

Nebraska, New Jersey, Ohio, South Dakota, Utah, Wyoming,

North Dakota, Rhode Island, New Hampshire, New York,

Pennsylvania, Puerto Rico, Vermont, Virgin Islands, Virginia,

West Virginia and Wisconsin.

Seattle Area Office

Supervisory Surety Bond Specialist

Thomas Ewbank

2401 4th Avenue, Suite 450

Seattle, WA 98121

Phone: 206/553-0961

FAX: 206/553-6259

Geographic Territory: Alabama, Alaska, Arkansas, Arizona, 

California, Florida, Georgia, Guam, Hawaii, Idaho, Kentucky, 

Louisiana, Mississippi, Nevada, New Mexico, Oklahoma, 

North Carolina, Oregon, South Carolina, Texas, Tennessee

and Washington.

All SBA programs and services are provided to the public on a nondiscriminatory basis.