WASHINGTON, DC. Aug 6, 2022 (Biz Republic) — The House Small Business Committee, under Chairwoman Nydia M. Velázquez (D-NY), held a hearing focused on increasing small business participation in infrastructure projects by strengthening the Small Business Administration’s (SBA) Surety Bond Guarantee Program (SBG). Every year, SBG helps thousands of small firms access government contracts by guaranteeing surety bonds, which are required to engage in many construction, service, and supply projects.
“As projects related to the bipartisan infrastructure bill continue to develop, demand for Surety Bond Guarantees may increase. Given that, this Committee must look for ways to improve the program to better serve more small businesses,” said Chairwoman Velázquez. “For small businesses to benefit as much as possible from this once-in-a-lifetime infrastructure investment, they must be well equipped to engage in the federal contracting process. Today, I want to take a close look at how the program is operating and how Congress can ensure it is prepared to meet small businesses’ needs as they rebuild America’s infrastructure.”
In November of 2021, President Biden signed the Bipartisan Infrastructure Bill into law, allocating $550 billion in new spending to revitalize America’s roads and bridges, public transportation, broadband access, and drinking water and wastewater infrastructure. Small businesses are set to play a significant role in this effort as they contract with the government to complete projects related to these investments.
Surety bonds are three-party agreements between a surety, a contractor, and a project owner that help reduce risks in the contracting process. The Miller Act requires a surety bond for all federal construction contracts greater than $150,000. The SBG Program expands access to the federal marketplace by guaranteeing bonds to small businesses unable to obtain them elsewhere. Given the influx in investment brought on by the bipartisan infrastructure bill, experts predict demand for the SBG may increase. The hearing allowed lawmakers to examine the program’s current operations and ways it can be improved to keep up with increased investment in infrastructure.
“I believe without question that the SBA Surety Bond Guarantee Program is a valuable resource to small and emerging contractors which, for various reasons, otherwise may fail to qualify for surety credit in the standard market,” said Peter Gibbs President of Foundation Surety & Insurance Company in Bowie, MD and Former Director of SBA’s Office of Surety Guarantees. “I commend the SBA Surety Bond Guarantee Program for initiating a number of meaningful changes in recent years that have expanded business opportunities for many small businesses with contracts that require surety bonds with reasonable terms.”
“Undoubtedly, the Infrastructure Investment and Jobs Act will increase opportunities for small and emerging contractors, including minority- and women-owned businesses,” said Ralph Pulver, Regional Underwriting Officer at Traveler’s Bond in Hartford, CT. “For some contractors new to the surety bond market, the SBA Surety Bond Guarantee Program will help make that opportunity a reality.”
“Through lots of hard work, some good luck, and the SBA-backed bonding program, Willow has recovered our financial stability and in 2020 were able to re-enter the commercial bond market,” said Alan Gravel, President of Willow Construction, LLC in Powder Springs, GA. “Since then, we have had the 3rd and 4th best years in our 30-year history and are steadily reducing our debt, upgrading our equipment fleet, and hiring young employees who will carry the Company into the future.”