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SBA Surety Bond Guarantee (SBG) Program

A Strategic Resource for California Contractors

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Overview

The U.S. Small Business Administration’s (SBA) Surety Bond Guarantee (SBG) Program helps small and emerging businesses especially contractors secure bonding when traditional surety providers would typically deny them due to:

  • Limited credit history
  • Low working capital
  • Lack of prior bonding experience

This is especially valuable in California’s competitive construction industry, where public works and infrastructure projects are booming but often require bonding that many small contractors can’t obtain on their own.

Bond Limits

  • Up to $10 million for federal government contracts
  • Up to $6.5 million for other public or private contracts

Who Is a Good Fit for the SBG Program?

This program is ideal for:

  • Start-ups or contractors under 3 years in business
  • Firms with limited job history or weak financials
  • Businesses seeking to increase bonding capacity
  • Firms looking to reduce or avoid high collateral requirements
  • Subcontractors aiming to grow and take on larger scopes of work
  • Minority-, veteran-, and service-disabled veteran-owned businesses

Eligibility Criteria

To qualify for the SBG Program, a business must:

  • Operate in construction, service, or supply industries
  • Be independently owned and operated
  • Be considered small per SBA size standards
  • Demonstrate good character and a reasonable expectation of contract completion
  • Revenue caps vary by industry:
  • $8 million – Services (e.g., landscaping)
  • $16.5 million – Specialty trades (e.g., electrical, plumbing)
  • $39.5 million – Heavy construction (e.g., bridges, roads)

SBA QuickApp: Streamlined Application for Small Jobs

For contracts under $500,000, the SBA QuickApp offers a fast-track application process with minimal requirements:

  • No financial statements required
  • Only basic business info, credit check, and contractor resume needed
  • Ideal for very small contractors or first-time bond applicants

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Shawn Rabban
310 -714 -5616
Insurance License: 0613659

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Why It Matters in California

California’s public sector is one of the most active in the nation, with major investments in:

  • Transportation (Caltrans and DOT projects)
  • Education (school and community college builds)
  • Water and energy systems
  • Affordable and low-income housing
  • Public-private partnerships (P3s)

The SBG Program removes bonding barriers, helping small contractors tap into these multi-billion-dollar opportunities in regions like Los Angeles, San Diego, San Francisco, and the Central Valley.

Key Benefits for California Contractors

  • Compete with Larger Firms – Access to bonding levels the playing field
  • Business Growth – Bid on more and larger jobs
  • Build Reputation – Establish a bonded work history
  • Reduce Financial Burden – Lower or no collateral requirements
  • Access Public Projects – Expand into recession-resistant, government-funded work

Understanding the Advantage Over Traditional Surety Bonds

What is a Surety Bond?

A surety bond is a guarantee that a contractor (the principal) will complete a project for the project owner (obligee). If the contractor fails, the surety covers the cost—then seeks repayment from the contractor.

Common types in construction:
  • Bid Bond – Guarantees you’ll accept the job if awarded
  • Performance Bond – Guarantees you’ll complete the work
  • Payment Bond – Ensures payment to subcontractors and suppliers
Problems with Traditional Surety Bonds

Most surety companies require:

  • Strong credit scores
  • Solid financials
  • Proven work history
  • Sufficient liquidity
  • Sometimes collateral

If your credit or financials don’t meet the mark, your bond application is likely to be denied or require costly collateral.

How the SBA SBG Program Helps

The SBA guarantees up to 90% of the bond amount, reducing the surety company’s risk and making it more likely your bond will be approved, even if:

  • Your credit is fair or low
  • Your financial statements are basic
  • You lack bonding history
  • Your credit is fair or low
Example: A contractor denied bonding by a traditional surety can often get approved when applying through the SBA SBG Program, since the SBA acts as a federal backer.

Application Process with SBA SBG

Yes, you still apply through a surety company (e.g., Old Republic Surety) — but:

  • They submit your bond application through the SBA program
  • The SBA guarantees the bond if approved
  • This makes bonding more attainable and less risky for both parties

Bottom Line: Is the SBA SBG Program Right for You?

The SBG Program may be your best or only option if:

  • Your credit score is under 700
  • You’ve been denied a bond before
  • You’re less than 3 years in business
  • Your financials are thin or don’t meet surety standards
  • You’re ready to grow but lack bonding history