To be eligible for the program, a contractor must qualify as a small business concern. For federal contracts, the business must meet the standards of the North American Industry Classification Code. For all others contracts the contractor qualifies if its annual receipts are not more than $6.5 million. The limit amounts are larger for contractors working in declared disaster areas. In addition, the Food, Conservation, and Energy Act of 2008 increases the bond guarantee a small business can issue in these areas. The head of any federal agency can also request an increase in guarantee.

            To apply, the contractor chooses a bond producer and provides the required information that allows the producer to decide if a SBA guarantee is needed. The cost, or bond premium, to the contractor is published in the Federal Register. Both the contractor and the surety have a fee. The contractor pays $7.29 per thousand dollars of the contract amount and a premium to the surety. SBA also charges the surety 26% of what it collects from the contractor.

            For more information about the SBG program go to www.sba.gov/osg.

            This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.