Can contractors use the SBA’s Surety Bond Guarantee Program to bond a single project?
Typically your surety services partner is going to look at your overall working capital when evaluating a surety bond, but that’s not always the case.
In the contracting business, we recognize that a contractor’s overall working capital can fluctuate based on the completion stages of different projects, payment cycles, and many other factors.
That’s why the SBA created the Surety Bond Guarantee Program, or SBG. When overall working capital falls short, the program allows for support on a project-specific basis thereby reducing the working capital requirement to that particular project only.
Normally your surety services partner will want to see an overall 5% working capital position, considering all current projects in the company in the aggregate. But with the SBG program, we’ll consider a 5% working capital position in the specific project you’re trying to bond.
The project-specific working capital can come through a project-specific Letter of Credit (LOC) or other methods.
Does this all sound complicated?
It won’t after you check out this 90-second video from Gemma Fendler, Senior Surety Specialist at Anderson & Catania Surety Services, LLC.