Friday, 6 April 2012

American Subcontractors Association supports SBA's surety bond guarantee proposals

On April 5, the American Subcontractors Association (ASA) told the U.S. Small Business Administration that it supports the agency’s proposal to make it easier for small business construction contractors to apply for a surety bond with an SBA guarantee.

ASA submitted comments in support of a regulatory proposal to reduce the paperwork burden associated with the SBA’s Surety Bond Guarantee Program. The proposal would apply to surety bonds guaranteed by SBA for construction contracts with an anticipated award value of $250,000 or less. Under SBA’s proposal, a new “Quick Bond Guarantee Application and Agreement” would replace two separate forms, one for application, and one setting forth the specific surety bond guarantee agreement.

The proposal would also directly lessen the paperwork burdens on ASA members participating in the SBG program by eliminating two forms that currently must be submitted. Finally, the SBA proposal would eliminate the confusion caused by regulatory references to a form that is no longer used. SBA’s SBG program for small construction contractors has two major elements. Under the Prior-Approval Program, a small contractor makes application to a participating corporate surety, which then submits the application for the SBA guarantee to SBA for approval or denial. Under the Preferred SBG program, SBA enters into an agreement with a corporate surety, which is then empowered to directly issue a surety bond with the SBA guarantee, an easier process for both contractor and surety.

ASA was a major supporter of the legislation that authorized the Preferred SBG program. Learn more about the overall SBG program for small businesses on construction contracts with an award value of $2 million or less.

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