SBA Changes Surety Bond Rules for Disaster Areas

The U.S. Small Business Administration has raised surety bond guarantee limits as part of changes to the Surety Bond Guarantee (SBG) Program that will help construction and other companies land larger contracts for projects in areas that have been impacted by disasters.

These changes are related to the Small Business Disaster Response and Loan Improvements Act of 2008 [H.R. 6124], a law that increases the eligible amount for work related to a major disaster.

The changes (published as part of a Proposed Rule in The Federal Register in April 2010) include the following:

• For a non-federal contract or order up to $5 million, a bond guarantee may be issued if the products will be manufactured or the services performed in the disaster area.


• For a federal contract or order up to $5 million, the performance site can be outside the disaster area if the contract or order will directly assist the disaster recovery efforts.


• For a federal contract or order, the amount of the guarantee can be as much as $10 million at the request of the head of an agency that is involved in reconstruction efforts.

SBA Administrator Karen Mills commented, “SBA is committed to mobilizing resources as quickly as possible following disasters to help begin economic recovery for communities, businesses and families. These changes to the Surety Bond Program will have a two-fold impact. Helping small businesses compete for and win contracting opportunities gives them the chance to grow and create jobs, while at the same time jump-starting economic activity and rebuilding efforts following a disaster when communities and regions need it most.”

The larger amounts would apply during the 12 months following the disaster declaration, unless the Small Business Administration provides for an extension for a specific disaster.

Read more about this change at the Minority Business Development Agency blog.