The process of getting bonded can be long and tedious but when done properly it can be quick and painless. These forms aim to pinpoint your situation in order to determine if you qualify for the SBG program. They are outlined here so that you can understand what is required:
STANDARD APPLICATION PACKAGE FOR INITIAL CONTRACTS OVER 250K
SBA FORM 994 – This required form serves as the contractor’s application for surety bond guarantee assistance. It covers business information, principal information, contract information, agreements, certifications, and comments.
SBA FORM 912 – This form acts as a statement of personal history and is required for each owner with 20% or more of equity in the company.
SBA FORM 991 – This form is only required if the work has already been started prior to filling out the SBA application. The “Billed to date”, “Paid to date”, and “Lien Waiver” amounts must all agree and the principal must certify that all suppliers and/or subcontractors have been paid as of the principal’s signature date. The obligee must certify that all payments due to the principal are current and that the project has been performed as of the Obligee’s signature date.
SBA FORM 994F – This form lays out the current schedule of work that has been assigned, both bonded and unbonded. This must be updated every 90 days.
SBA FORM 413 – A personal financial statement (PFS) must be submitted by each principal of the company, all persons who completed 912’s, and all persons who personally compensate on the General Indemnity Agreement (GIA) must provide the 413 form or equivalent form.
SBA FORM 990 – This form, a legal agreement between the SBA and the surety company, specifies the SBA guaranteed bond.
SBA FORM 994B – This form contains business, financial, and contract specific information and reviews the account from the surety company’s or surety agent’s perspective.
Bank Line of Credit Statement (BLOC) – The BLOC gives evidence of bank line of credit, signed and dated by the bank, and may be used to qualify a contractor for SBG assistance. It needs to include the amount available of the BLOC, any collateral provisions, and an expiration date.
Methods of Accounting also affect Bond Capacity – (at year end)
- CPA Audit – for contracts 6.5 to 10 million
- CPA Reviewed Statement – 1 million to 6.5 million
- CPA Compiled or In-House Plus – contract between $500,000 and 1 million
- In-House – can go up to $500,000
Information required for an SBA bond application through the Quick Application Process:
- SBA 912 form
- SBA 990A, page 1 of the form (Quick Bond Guarantee Application and Agreement)
- SBA Personal Financial Sheet
- Short Form Contractor Questionnaire – provided by the surety company
- SBA bond request template – provided by the surety company
Contract Requirements for the Surety Bond Guarantee (SBG) – Quick Application Process*:
- The contract can be for no more than $250,000
- The warranty period has maximum of 2 years
- There must be a maximum on the Liquidated Damages (LD’s) of 1,000/day
- Work must NOT have been started already
- Contracts do NOT involve asbestos abatement, removal of hazardous waste, or other regulated materials that are considered harmful to the environment, demolition, or timber sales
- Bond cannot be issued under a bonding line
*If the criteria are not met the business can still get bonded; however, they must go through the full application process which requires SBA approval for these requirements clearly described by the contract or bid proposal.
After the application package is completed, you can move on to getting bonded. The package may look daunting, but with a bit of time and effort it can be quickly completed. The next blog in the SBG program series will cover the actual underwriting process and factors that effect whether or not someone can get bonded.