Surety bonds

The Small Business Administration (SBA) guarantees bid, performance, and payment surety bonds issued by certain surety companies.

Content

SBA guarantees surety bonds

Surety bonds help small businesses win contracts by providing the customer with a guarantee that the work will be completed. Many public and private contracts require surety bonds, which are offered by surety companies. SBA guarantees surety bonds for certain surety companies, which allows the companies to offer surety bonds to small businesses that might not meet the criteria for other sureties.

How the SBA Surety Bond Program works

Surety bonds are requested

Businessman and contract

Some contracts require that the business doing the work be properly bonded.

Surety partners with business

Business and contract

Authorized surety companies provide surety bonds to businesses that meet their qualifications.

SBA guarantees

Contract

SBA guarantees surety bonds for private surety companies, so more small businesses can qualify.

Small businesses benefit

Handshake

Small businesses get SBA-guaranteed surety bonds so they can get to work.

Contract or commercial bonds

Depending on the the type of work, a business may be required to obtain a contract bond or a commercial bond.

SBA guarantees contract bonds, but doesn’t guarantee commercial bonds. Contract bonds ensure the terms of a specific contract are fulfilled. Commercial bonds ensure all applicable laws and regulations are followed. Government agencies require certain companies or individuals to obtain commercial bonds, which protect the general public against things like fraud.

The right surety bond for the project

Some contracts require surety bonds that cover specific situations. SBA guarantees surety bonds that cover several major categories of work.

Bid

Gavel

Ensures full payment and performance bonding from the contract bidder.

Payment

Cash in hand

Ensures full payment to the suppliers and subcontractors.

Performance

Checklist and magnifying glass

Ensures full completion of a contract by small business.

Ancillary

Wrench and gear

Ensures completion of requirements outside of performance or payment, such as maintenance.

Bond Guarantee Fee

All performance and payment bond guarantees require small businesses to pay SBA a fee of 0.6% of the contract price. If for some reason the bond is cancelled or not issued, SBA will return the guarantee fee. SBA does not charge a fee for bid bond guarantees.

Eligibility

Determine your small business’s level of eligibility before obtaining a surety bond. Does your business meet the following requirements?

Be a small business

Storefront

Qualify as a small business according to SBA’s size standards.

Have a small contract

Contract

Up to $9 million for non-federal contracts and up to $14 million for federal contracts.

Pass evaluation

Checklist

Meet the surety company’s credit, capacity, and character requirements.

Find authorized agents

Contact a surety bond agency

Check the database of surety agencies that offer SBA-guaranteed bonds.

Are you a transportation-related small business?

Explore the Department of Transportation's Bonding Education Program.

Short URL: sba.gov/surety-bonds
Last updated July 23, 2024

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