The Surety Bond Guarantee Program (SBG) is for small businesses that do not qualify for surety bonds on their own. This program helps participants secure contract surety bonds in order to apply for:
- Construction contracts
- Supply contracts
- Service contracts
- Manufacturing contract
The SBG Program mainly benefits small construction businesses or contractors that need bonds to bid on federal contracts. In turn, it also fosters US job creation, healthy competition, and economic growth.
In the guide below, we cover everything you need to know about the SBG Program. We delve into eligibility requirements, the application and approval process, costs and fees, and more.
What is the Surety Bond Guarantee Program?
The Surety Bond Guarantee Program was established in 1971 to assist businesses in winning federal contracts. This program, run by the U.S. Small Business Administration (SBA), provides smaller companies with an opportunity to qualify for those jobs by assisting them in obtaining the required contract surety bonds.
Contractors and small construction businesses often get turned down for surety bonds due to their limited resources, lack of experience, and/or poor credit. Surety companies consider these enterprises high-risk (less likely to pay bond claims). This is where the SBG Program comes in—they guarantee the surety (the company issuing that bond) that they will pay up to 90% of any unpaid bond claims.
Important: The SBA does not issue SBG surety bonds or any other type of bonds. Instead, they act as a middleman between the principal (the company that needs the bond) and the surety company.
Types of Surety Bonds Covered
The SBG program specifically covers contract surety bonds, also known as contractor surety bonds. This includes bid bonds, payment bonds, performance bonds, and ancillary bonds.
In short, the SBG Program assists with bonds required for federal construction and service contracts, ensuring that projects are completed as agreed upon. Thus, this program does not cover commercial bonds such as licensing surety bonds.
- Bid Bond - Allows you to bid on bonded jobs. Ensures payment bonding and performance bonding.
- Performance Bond – Guarantees that you will complete the work as per your contract.
- Payment Bond - Ensures that you’ll pay all laborers, subcontractors, and suppliers.
- Ancillary Bond – Guarantees work outside of performance and payment. A good example is maintenance bonds, which provide a warranty on your workmanship.
Performance and payment surety bonds have been required for federal public works projects since 1935—when The Miller Act came into play. This act requires contractors working on any project exceeding $100,000 to obtain a bond.
SBG Eligibility Requirements
Both your company and subcontractor must meet specific criteria to qualify for the SBG Program. To be eligible, you must:
1. Need to get Bonded – The bid process or the original contract expressly requires a bond. Additionally, you are unable to obtain a bond on your own.
2. Have a Small Contract – Up to $9 million for non-federal contracts and up to $14 million for federal contracts. Generally, you need to have previously worked on a project at least half the size of the one for which you seek the bond.
3. Be a Small Business – What qualifies as a “small business” varies by industry and is based on the number of employees or average annual revenue. For example, the current average annual revenue cap is:
- Specialty trade contractors – $19 million or less.
- General contractors – $45 million or less.
You can find the SBA’s size standards on their website or through the Electronic Code of Federal Regulations.
4. Subcontract Appropriately – You aren’t subcontracting the full scope of the work under the contract.
5. Be in Good Standing – You are not presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from transactions with any federal department or agency.
6. Have No Outstanding Taxes – You don’t have outstanding tax debts or other public debts. If you do have debts that have not been paid in full or resolved through a current payment agreement, you are ineligible for an SBA guarantee.
7. Pass the Evaluation – You meet the surety company’s credit capacity and character requirements.
8. Pay 0.6% Fee – You must have the funds to pay the SBA 0.6% of the contract price. For example, a $1 million contract would cost $6,000. There is no charge for bid bond guarantees.
Key Benefits of the SBG Program
The primary benefit of the SBG Program is that it helps you get bonded when you wouldn’t typically qualify. Other key benefits of the SBG Program include:
- Business Growth – As this program has no significant financial requirements, businesses can better manage their cash flow. This may allow them to grow quicker as they are able to pursue new contracts.
- Competitive Edge – The SBG Program enables businesses to compete in markets they would otherwise be unlikely to access. This competition helps maintain the industry’s high standard of work.
- US Job Creation – By enabling small businesses to take on federal contracts, the SBG Program contributes to job creation in the US. Since these federal contracts are often more demanding, companies often need to hire additional workers to meet project demands.
SBG Application
For your SBG application, you will need an SBA-approved surety agent, financial documentation, and more. Note that for contracts under $500,000, you can apply for the Quick Bond Guarantee Program. It is similar to the SBG Program, but requires less documentation to apply.
To apply to the SBG Program, you will need:
An SBA-Approved Surety Agent
Contact an SBA-approved surety agent. They will provide you with the application and review the requirements to get your surety bond.
Application Package
Key documents in the application that you will need to fill out include:
- SBA Form 994F – Schedule of Work in Process (WIP)
Information about your uncompleted work (i.e backlog), both bonded and unbonded.
- SBA Form 413 – Personal Financial Statement
Each principal of the company must complete this when submitting a non-Quick Bond guarantee application.
- SBA Form 990 – Surety Bond Guarantee Agreement
This form is the legal agreement between you, the SBA, and the surety company.
Having trouble with the SBG application? Contact our surety experts for instant answers, or fill out an SBG Application Assistance Request Form.
How Much Does an SBG Surety Bond Cost?
An SBG Surety Bond costs 0.6% of the contract price and typically 1 – 3% of the bond amount. For example, say you need a $50,000 contract bond to work on a $1 million project. See the chart below for a breakdown of surety bond costs.
|
What is the Fee For? |
Where Does the Fee Go? |
Fee Amount |
|
SBA |
|
|
|
Surety Bond |
Surety company |
$500 -$1,500 (1% - 3% of $50.000). May charge a higher percentage for those with bad credit. |
|
Surety Bond Claim |
Surety company. If you receive a bond claim, your surety company will initially pay it. However, you must then pay them back in full. The SBA only steps in if you default on payment. |
Full claim amount. Claims can only be in an amount equal to or less than your full bond amount. |
Final Thoughts
The SBG Program is invaluable to small businesses seeking contract bonds. It helps contractors, construction companies, and suppliers be competitive in their market. In turn, this creates more jobs, keeps the quality of workmanship high, and, overall, contributes greatly to the US economy.
FAQ’s
How Are Claims Handled for SBA Surety Bonds?
SBA surety bond claims are handled similarly to any other bond claim. At JW Surety Bonds, we have claim experts to walk you through the claim process and ensure claims made against your bond are valid.
For SBA bond claims that are found to be valid, we will initially pay the bond claim on your
behalf. However, you are then required to pay us back in full. If you fail to do so, we will seek
payment from the SBA. Defaulting on your bond claim payment may affect your ability to get
bonded in the future.
Can I Choose any Surety Company to Work With?
No, not all surety companies are eligible to issue SBA-guaranteed bonds. Check the list of SBA-approved surety agencies to ensure that you pick a company that meets your needs.
Can I Use the SBG Program More Than Once?
Yes, you can use the SBG program more than once. It is not unusual to have multiple bonds under the program. However, once you can obtain bonds under reasonable terms without an SBA guarantee, you are no longer eligible for SBG assistance.
Sources
13 CFR 121.104 -- How does SBA calculate annual receipts? (n.d.). Electronic Code of Federal Regulations. Retrieved June 17, 2025, from
https://www.ecfr.gov/current/title-13/chapter-I/part-121/subpart-A/subject-group-ECFRd133f03f6d8398b/section-121.104
Federal Register. (2020, October 2). Surety bond guarantee program fees.
https://www.federalregister.gov/documents/2020/10/02/2020-21876/surety-bond-guarantee-program-fees
Surety bond agency directory. (n.d.). U.S. Small Business Administration. Retrieved June 17, 2025, from
https://www.sba.gov/funding-programs/surety-bonds/surety-bond-agency-directory?state=All&page=5
Surety bonds. (n.d.). U.S. Small Business Administration. Retrieved June 17, 2025, from
https://www.sba.gov/funding-programs/surety-bonds
Surety Bonds - Circular 570. (n.d.). U.S. Department of the Treasury, Bureau of the Fiscal Service. Retrieved June 17, 2025, from
https://www.fiscal.treasury.gov/surety-bonds/circular-570.html
What is a surety bond? (n.d.). JW Surety Bonds. Retrieved June 17, 2025, from
https://www.jwsuretybonds.com/edu/what-is-a-surety-bond
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