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Where to get surety bonding for job completion

If you are working on a large job, particularly in construction, your customer may require that you obtain a surety bond. This is basically insurance, so your customer is compensated if you don't complete the job.

Because surety bonding is often difficult for small businesses to obtain, the Small Business Administration (SBA) offers a Surety Guarantee Program. A surety company issues a bond to a small business, and the SBA guarantees that bond.

The guarantee can insure the following:
  1. Bid - Bond which guarantees that the bidder on a contract will enter into the contract and furnish the required payment and performance bonds.
  2. Payment - Bond which guarantees payment from the contractor of money to persons who furnish labor, materials equipment and/or supplies for use in the performance of the contract.
  3. Performance - Bond which guarantees that the contractor will perform the contract in accordance with its terms.
  4. Ancillary - Bonds which are incidental and essential to the performance of the contract.
Smaller companies usually must have "Prior Approval" of the SBA guarantee, which means that the surety bond issuer must contact the SBA first to make sure they will guarantee the bond, before they can issue it.

Larger, more experienced companies can participate in the Preferred Surety Bond program, where pre-approval is not required.

How it works: The contractor must apply for a surety bond with a private company. The contractor then completes the following forms which are available at here:

  • SBA Form 994: Application for Surety Bond Guarantee Assistance
  • SBA Form 912: Statement of Personal History (on first application and once every two calendar years thereafter)
  • SBA Form 994F: Schedule of Uncompleted Work on Hand (required initially and then at least quarterly)
  • SBA Form 1624: Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion Lower Tier Covered Transactions
  • SBA Form 1261: Statement of Laws and Executive Orders
The surety company submits the forms to the SBA for prior approval. When the SBA approves it, the surety company issues the surety bond to the contractor.

For more information about the guarantee program, click here.