Small businesses that need surety bonds to compete for construction and service contracts can now qualify for Small Business Administration-backed surety bonds of up to $5 million, the agency said.
The higher amount, a result of the American Recovery and Reinvestment Act, is more than double the previous $2 million maximum surety bond guaranteed by SBA, according to the agency. Through SBA's surety bond program, it guarantees bid, payment and performance bonds. Surety bonds protect the project owner against financial loss if contractors default or fail to perform.
Under the partnership, SBA provides a guarantee to a participating surety company of between 70% and 90% of the bond amount. The new $5 million amount is effective as of March 27.
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