Frequently Asked Questions

Q. What is a surety bond?
A. A surety bond is a three-party instrument between a surety, the contractor and the 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.

Q. Does SBA issue bonds?

A. No. SBA does not issue bonds. SBA provides a guarantee for bid, payment, performance, and ancillary bonds issued by participating surety companies.

Q. What types of businesses are eligible to participate in SBA’s Surety Bond Guarantee (SBG) program?

A. Generally, all small businesses, whether they are sole proprietorships, partnerships, or corporations, are eligible to participate.

Q. How do I obtain an SBA guarantee?

A. It is a surety who issues the bond to a small business contractor, so s/he must first find an agent or participating surety company. SBA's contractual relationship, as it pertains to the guarantee, is directly with the surety company or its agent and/or managing general agents.

Q. What is an agent and how do I find one?

A. An agent is an individual who has power of attorney (POA) to issue bonds on behalf of a surety. Many agents have POAs for several surety companies. You can review the list of agents that participate in SBA's program at www.sba.gov/osg.

Q. What is the maximum contract size that can be considered for an SBA bond guarantee?

A. Individual contracts of $5 million or less are eligible. For Federal contracts valued above $5 million and up to $10 million, SBA can issue a bond guarantee, if the contracting officer certifies that a guarantee would be in the best interest of the Government, and a surety company participating in the SBA Program wishes to issue a bond. There is no limit to the number of bonds that can be guaranteed for any one contractor.

Q. Can I change agents and/or surety companies?

A. SBA does not designate a particular agent or surety company for a small contractor. The small contractor is free to change agents or sureties.

Q. My business is incorporated in one state, but most of my work is done in another. Which SBA office would handle my application?

A. The application will be handled by the SBA Area Office that services the state where your business is domiciled.

Q. Do I have to be an 8(a) contractor to participate?

A. No. You do not have to be a participant in 8(a) to participate in SBA’s SBG Program.

Q. Can I get an SBA bond guarantee even though I'm not a U.S. citizen?

A. Yes. But you must be a legal alien bearing a registration card that entitles you to work in the United States. Illegal aliens are not eligible.

Q. Can I get an SBA guarantee even if I have been bonded before without one?

A. Yes. If a contractor is unable to obtain a bond on reasonable terms and conditions without an SBA guarantee, an SBA guarantee may be granted. But a contractor must not obtain some bonded work without an SBA guarantee and other work with the SBA guarantee. All bonded work must be SBA guaranteed.

Q. What are my costs for obtaining an SBA bond guarantee?

A. All final bond applications require you to pay a guarantee fee of $7.29 per thousand dollars of the contract face value. If for some reason the bond is cancelled or not issued, the guarantee fee will be returned. SBA does not charge a contractor for bid bond guarantees. The contractor's fee applies to a final bond guarantee only.

Q. How long does it take for SBA to process an application?

A. Generally, it takes only three to five days to process a properly completed application.

Q. Can I contact SBA regarding the status of my application?

A. Since SBA’s contractual relationship is with the surety, SBA does not interact directly with contractors. Therefore, you must contact your agent/surety to find out the status of your application.

Q. As a prime contractor, will the SBA guarantee of my bond also cover my subcontractors?

A. No. Your SBA guarantee bond is a tri-party agreement between you the contractor, SBA, and the surety. If your subcontractors fail to satisfactorily complete their portion of the work and thus cause a breach in your general contract with the obligee, the obligee has recourse under your SBA guarantee bond. If the subcontractors have been bonded back, then you have recourse under their bonds.

Q. How long can I participate in the program?

A. There is no limit on the length of time a contractor may participate, but the goal is to help contractors become bondable without SBA assistance.

Q. Can I use both the Prior Approval and PSB programs to get an SBA guarantee?

A. Yes. You are free to choose from either program in order to obtain an SBA guarantee. However, the guarantee percentage varies from program to program.