# No bond, no bid? How the SBA surety guarantee works > Bonding capacity, not the bid list, decides which public jobs a young contractor can chase. Here is how the SBA Surety Bond Guarantee program works and what it costs. By Elie Mendlow · Published November 11, 2026 Section: Business Funding › SBA & Government-Backed · Series: Contractor Desk (https://mcafax.com/notebook/series/contractor-desk) Canonical: https://mcafax.com/notebook/contractor-sba-surety-bond-guarantee Source: MCAFax, The Broker's Notebook (https://mcafax.com/notebook). MCAFax is not a lender or a law firm. --- Two sureties said no, and the city bid closes Thursday at 2 PM. For a young sub or GC, bonding capacity decides which public jobs you can take. The SBA Surety Bond Guarantee program backs bid, performance and payment bonds from participating sureties. Decide early whether to call an SBA-authorized agent. This is general information, not legal or financial advice. Program rules below are from SBA and 13 CFR part 115 as of November 10, 2026. ## What does the SBA actually guarantee? SBA guarantees bid, payment, performance and ancillary surety bonds issued by certain surety companies: https://www.sba.gov/funding-programs/surety-bonds The guarantee lets those sureties bond small businesses that might not meet their usual criteria. SBA does not lend you money or issue the bond. It shares the surety's loss if a guaranteed bond is paid out. The share is set at 13 CFR 115.31. SBA reimburses a Prior Approval surety for 90% of the loss when the contract is $100,000 or less, or when the bond is for a qualifying disadvantaged, HUBZone, veteran-owned or service-disabled veteran-owned small business. Otherwise the share is up to 80%: https://www.ecfr.gov/current/title-13/chapter-I/part-115 ## Which jobs and contractors qualify? Three tests, per the SBA page: - Be a small business under SBA size standards for your industry. - Have a contract of up to $9 million for non-federal work, or up to $14 million for federal work. The federal ceiling applies when a contracting officer certifies the guarantee is necessary, per 13 CFR 115.10. - Pass the surety's own review of credit, capacity and character. That last test is where first-time bidders stall. The SBA guarantee lowers the surety's risk. It does not remove underwriting. Watch change orders on small jobs. Under 13 CFR 115.31, when a job that started at $100,000 or less grows past that line, the 90% share drops one percentage point for each $5,000 of increase, but not below 80%. A $120,000 final contract would sit at 86%. ## What does it cost the contractor? SBA charges no fee for bid bond guarantees. For performance and payment bond guarantees, the small business pays SBA 0.6% of the contract price. The surety's premium is separate, and 13 CFR 115.32 caps it at what the state insurance department authorizes. ### Worked example All names and numbers are made up. Kestrel Paving, a three-year-old sub, bids a $640,000 city resurfacing job that requires a 5% bid bond plus performance and payment bonds. Two standard sureties pass. An SBA-authorized agent places the bonds with a participating surety. The bid bond carries no SBA fee. After award, Kestrel pays SBA 0.6% of $640,000, or $3,840, plus the surety premium. Because the contract is over $100,000 and Kestrel has no qualifying certification, SBA backs up to 80% of any surety loss. A $95,000 job would carry a 90% guarantee. ## How do you get one before bid day? Start the file before the bid, not after the invitation lands. 1. Find an agent through the SBA database of surety agencies that offer SBA-guaranteed bonds, linked from the SBA surety bonds page. 2. Ask the agent for their document list. Expect questions on credit, capacity and character. 3. Confirm your size status against SBA size standards for your NAICS code. 4. Check the job: contract value, bond types required, and whether it is federal or non-federal. 5. Budget the 0.6% fee and the premium into your bid price. First-time public bidders in contractor forums keep asking whether the SBA program is real help or just paperwork. Its value is access. It can open a surety door that was closed, but you still have to show you can do the work. ## Where does bonding fit in the cash plan? A bond is not working capital. Mobilization, payroll and materials still come before the first pay estimate. Size those separately: https://mcafax.com/notebook/construction-business-loans and https://mcafax.com/notebook/where-to-get-business-funding If the job is prevailing-wage, treat the weekly payroll gap as its own line item in the cash plan, and start at https://mcafax.com/notebook/construction-business-loans . ## Questions readers ask **Does the SBA program cover my contractor license bond?** Probably not. SBA guarantees contract bonds, such as bid, performance, payment and ancillary bonds. It does not guarantee commercial bonds, which ensure laws and regulations are followed, so ask your agent which group your license bond is in. **Does the SBA write the bond itself?** No. A surety company issues the bond and SBA guarantees part of the surety's loss. You work through an SBA-authorized surety agent, not through SBA directly. **What if the bond is never issued?** SBA says it returns the guarantee fee if the bond is cancelled or not issued. **Who can I ask about the program?** SBA lists suretybonds@sba.gov for program questions on its surety bonds page. Transportation contractors can also look at the Department of Transportation Bonding Education Program mentioned there.