About Office of Surety Bond Guarantees

The U.S. Small Business Administration’s (SBA) Surety Bond Guarantee (SBG) program can guarantee bid, performance and payment bonds for individual contracts of $2 million or less for small and emerging contractors who cannot obtain surety bonds through regular commercial channels.

There is no limit to the number of bonds that can be guaranteed for any one contractor. SBA's guarantee gives sureties an incentive to provide bonding for eligible contractors, and thereby provides greater access to contracting opportunities. A surety guarantee, an agreement between a surety and the SBA, provides that SBA will assume a predetermined percentage of loss in the event the contractor should breach the terms of the contract.

About Surety Bonds

A surety bond is an instrument that is signed by the Principal, or Contractor, and the Surety Company in order to protect the interests of the Obligee, the party issuing the contract, in the event the Principal defaults on the contract.  If the Principal defaults, the Surety Company steps in to ensure the contract is completed.

There are three types of surety bonds:

• Bid Bond: Guarantees that the bidder on a contract will enter into the contract and furnish the required payment and performance bonds if awarded the contract.

• Payment Bond: Guarantees that suppliers and subcontractors will be paid for work performed under the contract.

• Performance Bond: Guarantees that the contractor will perform the contract in accordance with its terms and conditions.*
  (*The term Final Bond means Payment Bond, Performance Bond or both Payment and Performance Bond.)

Any Federal Construction contract valued at $100,000 or more requires a surety bond as a condition of contract award.  Many service contracts, and occasionally, supply contracts, also require surety bonds.  The mission of the Office of Surety Guarantees is to provide surety bond guarantees for qualified small businesses in direct partnership with surety companies and their agents

The SBA Surety Bond Guarantee Program is comprised of two components, the Prior Approval Program and the Preferred Program. 

In the Prior Approval Program, the guarantee rate is 80% or 90%. The guarantee rate is 90% if the contract is $100,000 or less, or the small business is 8(a), HUBZone, Veteran-Owned or Service-Disabled Veteran-Owned.  The guarantee rate is 80% if the contract is greater than $100,000, and the business is not 8(a), HUBZone, Veteran-Owned or Service-Disabled Veteran-Owned. All proposed SBA bond guarantees must be approved in advance by the SBA Denver or Seattle office, based upon the address of the small business. Click here to see which states are covered by the Denver Office and click here to see which states are covered by the Seattle Office. 

In the Preferred Program, the guarantee rate is 70%. Preferred Surety Companies are authorized to issue SBA guaranteed bonds to small businesses without SBA’s “prior approval.” Preferred Sureties, however, are subject to on-site audits at least once every three years.

In addition to familiarizing yourself with the surety bond guarantee information contained on this site, please take a moment to review the organizations and services listed below.

• SBA District Offices

• SCORE

• Small business Development Center (SBDC)

Just as small businesses must apply for a bond guarantee with a surety company or an agent representing a surety company, surety companies must apply to participate in the SBA Program.

Additional Information

For more information on specific areas of the surety guarantee program, please click on one of the following links:

• Small Business Eligibility Requirements

• Bond Guarantee Application  – Small Businesses

• Bond Guarantee Application– Surety Company/Agent

• Bond Guarantee Application Forms

• Bond Guarantee Fees

• List of Participating Surety Companies & Agents

• Admitting New Surety Companies to the Program