Story from EGPnews.com
Hoping to increase the number of small businesses able to take advantage of contracting opportunities, the U.S. Small Business Administration (SBA) and the California Department of Transportation (Caltrans), Office of Civil Rights, have signed an agreement aimed at increasing small businesses access to SBA’s Surety Bond Guarantee program.
Under a Joint Bonding Assistance Initiative, SBA and Caltrans will work together to help ensure qualified small businesses can obtain the necessary bonding required on Caltrans construction contracts and subcontracts, the agencies announced earlier this week. A key component of this initiative involves the increased participation of surety companies, and surety company agents and producers in the SB Surety Bond Guarantee program. The SBA program guarantees a surety company between 70 and 90 percent of the cost incurred by the surety company in the event of a contract default.“During these difficult economic times,” said SBA Administrator Karen G. Mills, “this kind of federal-state partnership is particularly helpful to small and emerging contractors who have seen their markets hurt by a poor economy and a lagging construction environment.”
The agreement, in the form of a Memorandum of Understanding, MOU, dovetails with the recent passage of the American Recovery and Reinvestment Act. The Act contains, among other significant programs, the largest investment in new infrastructure for the nation since the 1950s, including roads, bridges and mass transit systems, and contractors will need surety bonds to bid on the work.
The Act also raises the contract ceiling for small business bond guarantee eligibility from $2 million to $5 million, and on federal contracts, up to $10 million following certification by the contracting officer that a bond guarantee would be in the best interests of the government. By increasing the limits, Caltrans and SBA hope that more small business will be able to take advantage of contracting opportunities expected to increase due to an influx of Federal Stimulus revenue.
In a separate move, the SBA announced it would also help small businesses suffering financial hardship due to the slow economy, by providing temporary relief to keep their doors open and get their cash flow back on track through to a new loan program announced by SBA Administrator Karen G. Mills.
