American Subcontractors Association, Inc.
1004 Duke St., Alexandria, VA 22314-3588 • www.asaonline.com • (703) 836-3482 fax
FOR RELEASE July 17, 2012
Contact: David Mendes, (703) 684-3450, Ext. 1335, email@example.com
ASA-Supported Proposal to Streamline SBA Surety Bond Guarantee Program, Improving Access to Bonding for Small Contractors, Takes Effect Aug. 15
ALEXANDRIA, Va. — Beginning Aug. 15, small construction contractors will have improved access to bonds under the U.S. Small Business Administration’s Surety Bond Guarantee Program, thanks to a new, streamlined application process supported by the American Subcontractors Association.
The SBA issued a final rule on July 16 to create its “Quick Bond Guarantee Application and Agreement.” The rule simplifies the paperwork needed for contractors to make use of the SBG program for construction contracts of $250,000 or less. Under the final rule, SBA will combine two existing forms, the SBA Form 994 (Application for Surety Bond Guarantee Assistance) and the SBA Form 990 (Surety Bond Agreement).”
ASA submitted comments to the SBA on April 5, expressing its support for the proposal to improve access to surety bonding, stating: “Paperwork burdens have real dollar costs that can deter participation in any federal program, especially for smaller dollar value transactions, which magnify the costs associated with the paperwork burdens. SBA’s proposal follows existing surety industry practice which is constantly attempting to minimize the administrative costs associated with smaller dollar value contracts without compromising the rigor of the process for the evaluation of the bond applicant.”
Getting access to surety bonds, a form of credit, can be difficult for small contractors without an established record. To assist small businesses, Congress authorized the SBA’s SBG program. Under the program, SBA guarantees 80 percent or 90 percent of the bond issued to a small business concern by a pre-approved corporate surety on a contract with an award value of $2 million or less. The SBG program has two components, the Prior Approval Program and the Preferred Surety Bond Program. Under the Prior Approval program, the participating surety must seek SBA’s approval for the guarantee on a contract-by-contract basis. Sureties in the Preferred Surety Bond Guarantee Program can issue SBA-guaranteed bonds without SBA’s prior approval.
Founded in 1966, ASA amplifies the voice of, and leads, trade contractors to improve the business environment for the construction industry and to serve as a steward for the community. ASA’s vision is to be the united voice dedicated to improving the business environment in the construction industry. The ideals and beliefs of ASA are ethical and equitable business practices, quality construction, a safe and healthy work environment, and integrity and membership diversity.