August 16, 2022 (WASHINGTON, DC) – The Surety & Fidelity Association of America (SFAA), a nonprofit, nonpartisan trade association representing all segments of the surety and fidelity industry, commends the Small Business Administration (SBA) for its recent updates to the Surety Bond Guarantee (SBG) Program. The ruling from the SBA clarifies and modernizes certain regulations and conforms them to industry standards. SFAA and other industry organizations submitted comment letters to the SBA during the review process and SFAA supports these updates, which include:
- Section 115.30 raises the maximum contract value from $400,000 to $500,000 for using the Quick Bond Guarantee Application and Agreement by a Prior Approval Surety.
- Section 115.14 increases the amount of claim reserve from at least $1,000 to at least $10,000. Failing to maintain this reserve would result in the principal and any affiliates losing eligibility for further SBA bond guarantees.
- Section 115.10 clarifies when, and under what circumstances, a maintenance agreement is covered by the SBG Program.
- Section 115.12 removes a requirement that a Contracting Officer must certify a statement confirming the small business has difficulty obtaining a bond through the commercial market; the rule is now streamlined to only require certification that the guarantee is necessary.
- Sections 115.19 and 115.64 clarify the definition for “commencement of work” given that the SBA is relieved of liability should work begin before the bonds are issued. Currently, this is limited to job site-specific work, but the updated definition makes it clear that any work which has a financial impact on the bond, such as purchasing supplies, is considered “commencement of work”.
- Sections 115.32 and 115.67 increase the threshold amount from $40 to $250 for what is considered a change in contract price requiring SBA notification.
Read the entire rule here. The SBG Program has been assisting small businesses in obtaining bonds and winning contracts for more than 50 years. Click here to see the list of companies participating in the SBG Program.
The SFAA and the National Association of Surety Bond Producers (NASBP) created the Contractor Bonding Education and Mentoring Program to help new and emerging construction businesses, particularly minority-owned and other under-represented businesses, learn how to qualify for surety bonds, click here to learn more about the program.
The Surety & Fidelity Association of America (SFAA) is a nonprofit, nonpartisan trade association representing all segments of the surety and fidelity industry. Based in Washington, D.C., SFAA works to promote the value of surety and fidelity bonding by proactively advocating on behalf of its members and stakeholders. The association’s more than 425 member companies write 98 percent of surety and fidelity bonds in the U.S. For more information visit www.surety.org.