Bond Guarantees for Surety Companies (59.016)

Program

59.016 Bond Guarantees for Surety Companies

Federal Agency

Agency: Small Business Administration

Authorization

Small Business Investment Act of 1958, Title IV, Part B, Section 410, Public Law 108-447.

Program Number

59.016

Last Known Status

Active

Objectives

To guarantee surety bonds issued by commercial surety companies for small businesses unable to obtain a bond without an SBA guarantee. The guarantees range between 70 and 90% and cover losses and expenses incurred by a participating surety should the small business default on the contract.

Types of Assistance

INSURANCE

Uses and Use Restrictions

Contracts not exceeding $2 million, where a surety bond is required but not obtainable privately without an SBA guarantee. Guarantee is for bid, payment, and performance bonds (and ancillary bonds incidental to the performance of a specific contract). It is provided directly to the surety for a particular contract. Under the Prior Approval program, sureties must apply to SBA for each guarantee. Sureties in the Preferred Bond Program are empowered to issue, service, and monitor bonds without prior SBA approval.

Eligibility Requirements

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.

Beneficiary Eligibility

For Federal contracts, a small business is eligible for the surety bond program if it qualifies as a small business under Code of Federal Regulations Subpart 121, Size Eligibility Provisions and Standards. For State, local, and commercial contracts, a small business is eligible if its average annual revenues do not exceed $6.5 million.

Credentials/Documentation

Application and supplement information. This program is excluded from coverage under OMB Circular No. A-87.

Application and Award Process

Preapplication Coordination

Preapplication coordination is not applicable. Environmental impact information is not required for this program. This program is excluded from coverage under E.O. 12372.

Application Procedure

This program is excluded from coverage under OMB Circular No. A-102. This program is excluded from coverage under OMB Circular No. A-110. A small business must apply directly to a surety agent who represents a participating surety company. The application includes background, credit, and financial information. Under the Prior Approval Program, the surety company deals directly with the SBA Area Office concerning the bond guarantee. Headquarters, Area and District SBA Offices serve as contact points for program information purposes.

Award Procedure

Under the Prior Approval Program, SBA notifies the surety company of SBA's approval of the guarantee and furnishes the surety with written authorization. Surety company (or agent/broker) notifies the bond applicant and issues the bond. Preferred sureties issue bonds guaranteed by SBA without SBA's prior approval. Prior approval and PSB sureties remit 26 percent of the premium they charge small businesses to SBA. Small businesses pay SBA a fee of .729% of the contract price.

Deadlines

Not Applicable.

Range of Approval/Disapproval Time

The goal for completing the review of a bond guarantee application is 3 days.

Appeals

Additional information available on SBA's website at www.sba.gov.

Renewals

Additional information available on SBA's website at www.sba.gov.

Assistance Considerations

Formula and Matching Requirements

Statutory formulas are not applicable to this program.

Matching requirements are not applicable to this program.

MOE requirements are not applicable to this program.

Length and Time Phasing of Assistance

Guarantee runs to termination of bond (usually completion of contract). See the following for information on how assistance is awarded/released: Additional information available on SBA's website at www.sba.gov.

Post Assistance Requirements

Reports

Additional information available on SBA's website at www.sba.gov. Additional information available on SBA's website at www.sba.gov. Additional information available on SBA's website at www.sba.gov. Additional information available on SBA's website at www.sba.gov. Additional information available on SBA's website at www.sba.gov.

Audits

In accordance with the provisions of OMB Circular No. A-133 (Revised, June 27, 2003), "Audits of States, Local Governments, and Non-Profit Organizations," nonfederal entities that expend financial assistance of $500,000 or more in Federal awards will have a single or a program-specific audit conducted for that year. Nonfederal entities that expend less than $500,000 a year in Federal awards are exempt from Federal audit requirements for that year, except as noted in Circular No. A-133. SBA has the right to audit its accounts with any participating surety. Each participating PSB surety must be audited every three years.

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 have information about participating small businesses for its assigned geographic area.

Program Accomplishments

Fiscal Year 2008: See the FY 2010 Performance and Accountability Report on SBA�s website at www.sba.gov. Fiscal Year 2009: See the FY 2010 Performance and Accountability Report on SBA�s website at www.sba.gov. Fiscal Year 2010: See the FY 2010 Performance and Accountability Report on SBA�s website at www.sba.gov.

Financial Information

Account Identification

73-4156-0-3-376.

Obligations

(Salaries) FY 08 $17,097,000; FY 09 est $19,396,000; FY 10 est $21,439,000

Range and Average of Financial Assistance

Additional information available on SBA's website at www.sba.gov.

Regulations, Guidelines and Literature

13 CFR 115.

Related Programs

Not Applicable.

Information Contacts

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.

Headquarters Office

David Lippold 409 3rd. Street, SW, Suite 6000, Washington, District of Columbia 20416 Email: david.lippold@sba.gov Phone: 202-205-6569

Web Site Address

http://www.sba.gov/osg

Examples of Funded Projects

Not Applicable.

Criteria for Selecting Proposals

Not Applicable.