New York SBDC Research Network

The Small Business Administration increased its guarantee percentage for bonds issued in the Preferred Surety Bond Program from no more than 70 percent to no more than 90 percent, per Public Law 114-92 of the National Defense Authorization Act of 2016. SBA guarantees will be 90 percent if the original contract is $100,000 or less, or if the bond is issued on behalf of a small business owned and controlled by socially or economically disadvantaged individuals, veterans, service disabled veterans, or qualified HUBZone and 8(a) businesses. In all other cases, the guarantee will be 80 percent. The increase will be effective Nov. 25, 2016. The new guarantee limits will expand bonding opportunities for many small businesses. For more information about the Surety Bonds Guarantees Program, please visit https://www.sba.gov/surety-bonds .

Small businesses will have more contracting opportunities beginning in FY 2017 thanks to a law President Obama signed recently that increases the maximum Small Business Administration surety bond guarantee percentage by 20 percentage points. The President signed the National Defense Authorization Act of Fiscal Year 2016 on November 25, 2015. Among other changes, the Act increases the maximum guarantee percentage in the SBA Preferred Surety Bond (PSB) Program from 70 percent to 90 percent. “This is the first significant legislative change to the surety bond guarantee program in several decades. It will provide increased incentives for surety bond companies and bond producers to participate in the program, which will expand contracting opportunities for small businesses across the country,” said Frank Lalumiere, Surety Bond Guarantee Program Director at SBA. Surety bonds help contractors bid on projects, both private and public as they protect project owners in the event the contr

Gov. Andrew Cuomo has unveiled a new program to eliminate some of the challenges minority and women-owned businesses face when bidding for state contracts. Cuomo's program, launched Feb. 21, provides MWBEs and small businesses with surety bond assistance. Surety bonds, or letters of credit from insurance companies, act as promises the insurance companies will cover a specific amount of a contract cost, should contractual obligations go unmet. Two A-plus rated surety bond companies, Travelers and ACE, are taking part in Cuomo's program, ensuring companies contracting to MWBEs up to 30 percent of the principle contract cost. In addition to surety bonds, New York state is collaborating with intermediary lenders to create more working capital loans for contractors. Cuomo says entrepreneurship, innovation and diversity are New York's strength. More HERE .

The idea behind surety bonding is simple and direct. One person, or entity, guarantees to another that a third person will perform a contract according to its terms. Small business contractors and service companies that want to become more competitive and bid on projects requiring surety bonds, can look to SBA for the help they need to step up to that next level of business success. Read more .