Small contractors may find it easier to obtain surety bonds as a result of changes in the Small Business Administration�s surety bond guarantee program.
SBA can guarantee bonds for contracts valued at up to $2 million. Under new rules that take effect July 25, sureties will be allowed to charge current state rates, rather than fixed rates set in 1987, the year before Congress established the program by what is now the Surety and Fidelity Association of America (SFAA). The regulations, published on June 25 in the Federal Register, also call for audits of SBA Preferred Surety Bond sureties every three years, compared with annual audits now.
The changes were made partly to make SBA guarantees more attractive to surety companies, which have been dropping out of the program in increasing numbers in recent years.
The American Insurance Association and SFAA support the new rules, saying that the SBA program "needs to be a go-to market for small and emerging contractors without a surety bond history to gain access to the bond market."