SBA Surety Bond Guarantee Program Requirements
SBA Surety Bond Guarantee Program provides a guarantee over a part of a surety bond, in order to get a participating surety for the issuance of the bond. The contract might not go through if there are no guarantees. Therefore, it allows small businesses to get more contracts. It has a few essential requirements which are as follows.
- Capital Requirements: The contractor should have adequate cash flow and liquidity to finish the project. This is referred to as aggregate bond capacity. It amounts to 20 times the sum of the company’s working capital and unused credit. The final capital requirements are also set by SBA, which differs according to the need of each case.
- Size Standards: The contractor has to follow the SBA size standards. This sets a maximum in both gross annual revenues and the number of employees.
- Eligible Surety Agent: the agent who is responsible for providing the surety must be approved by the U.S. Treasury for the purpose of issuing bonds in federal contracts.
- Capacity: the surety agent checks the contractor’s previous works and their ability to finish the undertaken project on time. This is completely different from affirming the SBA loan requirements for an existing business.