Decreasing Fees for SBA Surety Bond Guarantee
The United States Small Business Administration (SBA) has announced an upcoming decrease in fee related to their Surety Bond Guarantee (SBG) program. These changes will take effect during the 2019 fiscal year, which runs from October 1, 2018 to September 30, 2019. The contractor fee, which had previously been at $7.29 per thousand dollars of the contract amount, will be reduced to $6.00 per thousand of the contract amount. The SBA will also be reducing the fee charged to the surety from 26% to 20% of the bond premium charged to the contractor.
The SBG program enables surety companies to offer surety support for contractors who do not qualify for surety support through regular avenues. The SBG program guarantees bid, payment and performance bonds for non-federal contracts up to $6.5 million and federal contracts up to $10 million. The SBA also offers a QuickApp application for contracts below $400,000.
The SBG program is a great avenue for contractors to grow their business. The SBG allows for the surety companies to offer surety support for contractors who may not qualify for normal support. The reduced fee for contractors allows for more competitive bid prices for the contractors who utilize the SBA for surety support. The reduction of the fee to the surety will also incentivize the surety company to write more business using the SBG program. This news allows for more support for small businesses in the construction workplace.
More info can be found at the following links https://www.sba.gov/funding-programs/surety-bonds & https://markets.businessinsider.com/news/stocks/sba-announces-decrease-in-surety-bond-guarantee-fees-1027507096