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What's New: Advocacy

SFAA Supports SBA Bond Guarantee Program Fee Decrease

Friday, August 31, 2018  

SFAA Supports SBA Bond Guarantee Program Fee Decrease

SFAA submitted comments to support the U.S. Small Business Administration’s (SBA) decrease of the fees for the Surety Bond Guarantee Program (BGP). Beginning October 1, 2018, the fee charged to sureties will decrease from 26% of the bond premium to 20% of the bond premium and the fee charged to the bond principal will decrease from $7.29 per thousand dollars of the contract amount to $6 per thousand dollars of the contract amount. The decrease in the fees will expire on September 30, 2019. SFAA promoted the value of bonding for public works projects and noted that this program is a valuable tool in expanding access to surety bonds for small and disadvantaged businesses to assist them in building their businesses. We applauded the decrease in the fees as the current fee structure can serve as a disincentive for participation in the BGP for both sureties and contractors. We recommended further fee reductions if this decrease proves workable.

The fee reduction reverses an increase in the fees that SBA issued 12 years ago to address a deficiency in the revolving fund for the BGP. SBA believes that the revolving fund now has sufficient funds so that the fees can be decreased on a temporary basis. SBA will review the program during the one-year period of decreased fees to determine if the fees are sufficient and whether the change increases participation in the BGP.

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