Empowering Small Contractors With SBA’s Surety Bond Guarantee Program
The Small Business Administration’s (SBA) Surety Bond Guarantee Program is designed to assist small and emerging contractors, often minority or woman-owned, in obtaining surety credit. In partnership with Foundation Surety & Insurance Solutions, Merchants Bonding Company issues surety bonds for these contractors who have the knowledge and skills necessary for success, but might not yet meet all of the criteria other sureties require.
The process of applying for bond guarantees from the federal government can be a daunting task for contractors. Peter Gibbs, president of Foundation Surety & Insurance Solutions and former director of the SBA Office of Surety Guarantees, provides his expertise to help contractors find success through the SBA. Gibbs works directly with contractors to gather needed documents, supply necessary data, and ensure sufficient documentation – his knowledge of the system, and how to navigate it, is invaluable to contractors seeking credit.
What Types Of Contractors Could Benefit From Surety Bonds Through The SBA?
• Startups and firms in business less than three years
• Small businesses with limited capital
• Small businesses with internally prepared financial statements
• Small businesses that want to increase their current bonding limits
What Types Of Bonds Are Guaranteed By The SBA?
The SBA guarantees bid, performance, payment, and maintenance bonds.
• Up to $9 million for government and private sector contracts.
• Up to $14 million for federal contracts.
10 Tips For Building A Successful Construction Business
While obtaining surety credit is an important accomplishment, Gibbs is also committed to contractors’ longevity and helping them build a strong business that will grow and flourish. To that end, he distilled his years of experience into a simple list of best practices:
1. Build a strong team to support your business, making a construction accountant a priority.
2. Establish a bank relationship to secure a bank line-of-credit for working capital purposes.
3. Partner with a professional surety agent to assist in the development and growth of your construction company.
4. Expand your sales volume through gradual and controlled growth.
5. Concentrate on a specific trade and master that class of business.
6. Do not expand into areas you do not have the experience to perform.
7. A joint-venture structure is not always a viable path to expansion.
8. Know your competition and be familiar with economic cycles.
9. Become familiar with government contracts and operations prior to expanding into that sector.
10. It may be beneficial to perform a mix of public and private contracts.
Originally posted on Merchants Bonding website.