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Recovery Act increases surety bonds to $5 million

Small businesses that need surety bonds to compete for construction and service contracts can now qualify for U.S. Small Business Administration-backed surety bonds of up to $5 million. The higher amount, a result of the Recovery Act, is more than double the previous $2 million maximum surety bond guaranteed by SBA.

Through the Small Business Administration’s (SBA) Surety Bond Guarantee program, SBA guarantees bid, payment, and performance bonds. Surety bonds protect the project owner against financial loss if contractors default or fail to perform. The Recovery Act

SBA partners with the surety industry to help small businesses that would otherwise be unable to obtain bonding in the traditional commercial marketplace. Under the partnership, SBA provides a guarantee to a participating surety company of between 70 and 90 percent of the bond amount.


Additional program enhancements contained in the stimulus bill will be announced in the Federal Register. Among these changes is a provision that will allow SBA to guarantee a bond on a federal contract up to $10 million following certification by the contracting officer that the bond guarantee is required.

SBA assistance in locating a participating surety company or agent and completing application forms is available online. For more information on SBA’s Surety Bond Guarantee Program, go online to or call 800-U ASK SBA.
Source: Small Business Administration,


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