contractor bond companies
|
|
TurboTax Home & Business Federal + State + Federal efile 2009 $42.89 TURBOTAX HOME & BUSINESS WITH… |
|
|
Construction payment and performance bonds myths and reality.(LEGAL EASE): An article from: Journal of Property Management $9.95 This digital document is an article from Journal of Property Management, published by Institute of Real Estate Management on September 1, 2009. The length of the article is 552 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available immediately after purchase. You can view it with any web browser.Citation DetailsTitle: Constr… |
|
|
Surety bonds scarce, small contractors say.: An article from: National Underwriter Property & Casualty-Risk & Benefits Management $5.95 This digital document is an article from National Underwriter Property & Casualty-Risk & Benefits Management, published by The National Underwriter Company on February 19, 1990. The length of the article is 647 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase… |
How SBA Bonding Program works
Bonding Program (Surety Bonds)
SBA’s Surety Bond Guarantee (SBG) Program helps contractors to obtain surety bonds.
A surety bond is a three-party instrument between a surety (someone who agrees to be responsible for the debt or obligation of another), a contractor and a project owner. The agreement binds the contractor to comply with the terms and conditions of a contract. If the contractor is unable to successfully perform the contract, the surety assumes the contractor’s responsibilities and ensures that the project is completed.
SBA does not issue surety bonds; rather, it provides and manages surety bond guarantees for qualified small and emerging businesses through the Surety Bond Guarantee (SBG) Program.
SBA makes an agreement with a surety guaranteeing that it will assume a percentage of loss in the event the contractor should breach the terms of the contract. SBA’s guarantee gives sureties an incentive to provide bonding for eligible contractors, thereby strengthening a contractor’s ability to obtain bonding and greater access to contracting opportunities for small businesses.
SBA can guarantee bonds for contracts up to $5 million, covering bid, performance and payment bonds, and in some cases up to $10 million for certain contracts.
Four types of bonds:
- Payment. Guarantees payment from the contractor to persons who furnish labor, materials equipment and/or supplies for use in the performance of the contract.
- Bid. Guarantees that the bidder on a contract will enter into the contract and furnish the required payment and performance bonds.
- Performance. Guarantees that the contractor will perform the contract in accordance with its terms.
- Ancillary. Incidental and essential to the performance of the contract.
Prior Approval Program
An agent reviews the contractor’s application package and recommends it to the surety company for approval. If the company agrees to issue a bond with the SBA guarantee, the package is forwarded to the appropriate SBG Area Office. If the applicant is approved, SBA may issue a guarantee to the surety company. The surety then issues the bond to the contractor. SBA’s guarantee agreement is with the surety company, not with the small business contractor.
Any surety company certified by the U.S. Treasury to issue bonds may apply for participation in the Prior Approval Program, but its bonds are subject to SBA’s prior review and approval. Contractors bonded under this program are generally smaller and less experienced than contractors bonded under the Preferred Surety Bond (PSB) program.
Preferred Surety Bond (PSB)
The PSB program has been created to encourage larger surety companies to help small businesses. SBA gives selected sureties the authority to issue, monitor and service bonds without prior SBA approval. The SBA guarantee is 70% under this program. Each participating company has a guarantee limit with the SBA. PSB surety companies serve more experienced contractors that demonstrate the potential for growth and consistently have more active work programs. Sureties participating in this program cannot participate in the Prior Approval program.
Yury Iofe, MBA
Universal Business Structured Solution
More educational resources by Yury Iofe:
http://www.ubssolution.com/Education.html
About the Author
My name is Yury Iofe. I have over 15 years of Diversified Financial Experience. I am an MBA in Finance.
I am a Former Senior Editor with AICPA. Consulted numerous (including Fortune 1000) companies on different business issues such as: Financial Reporting, Financial Planning, Taxes, Business Financing, etc.
Bonds Only – Surety Bond Company
In by gone days all a contractor had to do was give the customer good quality and good service and he/she would be set. Then set back and let your customers do your selling for you. They would tell a friend and then that friend would tell a friend. Your phone would be ringing off the hook. I remember as an Architectural designer some days I would have up to four people wanting to schedule appointments for designs. Those days are long gone! But Fear Not! Click Here For Help
