The SBA has increased the single limits for its very successful surety bond program. Essentially - the SBA helps contractors obtain surety credit by guaranteeing the bond for Insurance Company should there be a loss. This mitigates the insurance companies risk and allows for less stringent underwriting. It’s been popular over the past few years as balance sheets of construction companies have taken some direct hits. Here are a few highlights:
Previous maximum - $2,000,000.00
New maximum - $6,500,000.00. They will go up to $10,000,000.00 but must be performed for a Federal Government Agency
Up to 2x the largest completed project ($6.5M - $10M maximum per individual project)
15 to 20x available working capital (for all projects)
- Lines of Credit are included as working capital
- Contractors with negative working capital may also be eligible using additional tools (like escrow)
Allowable business sizes based on total sales and the number of employees is determined by NAICS code. This varies depending on the type of business. Total sales can be as high as $33.5M in many cases.
SBA Paperwork the SBA has greatly reduced the amount of paperwork needed to utilize the program.
To learn more about this program please contact Greg Marco of McConkey Insurance and Benefits at email firstname.lastname@example.org, telephone 717-755-9266 or contact the construction professionals of McKonly and Asbury, LLP.