PIDC’s Small Contractor Workshop Series Tips

With more construction opportunities becoming available in the public and private sectors in the City of Philadelphia, PIDC hosted a 4-part Construction Workshop series to provide small contractors with the necessary tools for lasting success. Part 3 of the series was titled Understanding Contract Surety Bonding: An Orientation for Small Contractors led by strategic partner Ellen Neylan, President of Surety Bond Associates. This workshop covered the fundamentals of qualifying for construction bonding, determining costs, positioning your company for increases in bonding lines, and avoiding defaults.  It also covered how to choose the right bonding company for your growing needs.

PIDC offers a specific financing product for small contractors. The Contract Line of Credit Loan provides support to small, minority, women, veteran and disabled-owned businesses that need a line of credit to fund contract-related working capital.

To learn more: PIDC Small Contractor Workshop Series

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Maryland Church Fights Unlicensed Individual Surety Over Bond on Failed Project

The Korean Seventh-day Adventist Church was supposed to be in business in Columbia by now.

The church’s 150 members signed a deal, put money down and watched bulldozers roll. But construction stopped in late 2008 and the congregation never recouped its investment. Thanks in part, church officials say, because a bond that was supposed to insure the project didn’t pay off. The worshippers now borrow a building from a sister church, meeting in the afternoon after the other congregation worships in the morning.

Where prayer fails, sometimes regulation succeeds. The church’s problems are being held out as evidence that the state needs to increase oversight of wealthy individuals guaranteeing small contractors who can’t get backing from licensed corporate surety companies.

These “individual sureties” and their brokers are pushing back, seeking legislation that would allow them to continue to back construction without regulation by the Maryland Insurance Administration.

For more information, click here

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Higher Surety Bond Guarantees will Help Small Businesses Secure Larger Contracts

The U.S. Small Business Administration has made regulatory changes to its Surety Bond Guarantee Program, including higher surety bond guarantee limits up to $10 million that will help construction and service sector firms secure larger contracts for work in areas impacted by disasters.

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Connecticut Surety Bond Guarantee Program

SB 736 would establish a surety bond guarantee program to help small and minority contractors with bonding.

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Pennsylvania Surety Bond Guarantee Program

HB 83 reintroduces a state bond guarantee program bill that died for lack of funding last year. HB 83 would create the Surety Bond Guarantee Fund Program. The program would serve to enable disadvantaged businesses to bid competitively for certain Commonwealth contracts. The Surety Bond Guarantee Fund (Fund) would provide guarantees up to $1 million for any one small or disadvantaged business enterprise. To qualify for a guarantee, the bond would have to meet the following criteria: 1) the bond must be listed in the contract bonds section of “The Surety Association of America’s Manual Of Rules, Procedures and Classifications”; 2) the bond is required by the contract, invitation for bid or request for proposal; 3) the surety company issuing the bond must be listed on the U.S. Treasury Department’s Circular 570 as an acceptable company; and 4) the bond must meet any other requirements established in regulations. The bill also contains a provision that the bond must contain a provision allowing the bond to be cancelled with 30-days notice to the Department, or the bond will not qualify for a guarantee.

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US Government Hearing On Minority Contracting Issues

Last month, the Government Management, Organization and Procurement Subcommittee of the U.S. House Committee on Oversight and Government Reform held a hearing on minority contracting issues. The Subcommittee discussed existing federal programs for minority-owned business enterprises (MBE) and disadvantaged business enterprises (DBE), as well as the challenges that these businesses have faced. The testimony featured one panel including the Small Business Administration (SBA) and the Minority Business Development Agency of the Department of Commerce (MBDA), and representatives of minority and small business development divisions within the Departments of Transportation (DOT) and Defense (DOD) and the General Services Administration (GSA), and another panel of minority contractors.

The testimony of the federal agencies focused on what the agencies had done to help MBEs and DBEs and the continuing challenges the contractors face. Largely, the government witnesses focused on a lack of access to capital. David Hinson, National Director of the MBDA, which is an agency of the Commerce Department, noted that it is working on a surety bonding initiative with a goal of identifying $100 million in private capital through a public-private partnership and to grow to $1 billion over time.

The panel of minority contractors and legal experts included representatives from the Minority Business Enterprise Legal Defense Fund, Mid-Tier Advocacy, the Airport Minority Advisory Council (AMAC), the Associated General Contractors of America (AGC) and the Thelton E. Henderson Center for Social Justice at Berkeley Law. Most of these panelists stated that discrimination generally existed in all aspects of contracting, including contract formation, awards of contacts, bonding, insurance and credit.

Other key issues addressed during the panel of minority contractors were contract unbundling, multi-tier subcontractors counting toward small business participation goals, small business size standards and prompt pay requirements. In written testimony, the Minority Business Enterprise Legal Defense Fund noted that minority-owned construction firms were not able to meet bonding requirements, which constrained their participation in federal contracting opportunities. The written testimony stated that insurance brokers lack incentive to serve the minority construction firms, whose contracting opportunities are generally smaller in size.

Surety Bond Associates provides specialty surety bond services to small, minority and women owned contractors designed to eliminate the barriers that prevent them from accessing the financial resources necessary to actively compete.

Contact Us to learn more about our Surety Support Services

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Women-Owned Small Business (WOSB) Contracting Program

The long anticipated and landmark Small Business Act was recently passed, which authorizes federal contracting officers to specifically limit, or set aside opportunities for women-owned small businesses (WOSBs) or economically disadvantaged women-owned small businesses (EDWOSBs). Although the Small Business Administration has issued a final rule on the WOSB program, it will not be effective for several months.

To qualify as an EDWOSB or WOSB, the 51 percent ownership must be unconditional and direct. In addition, the management and daily business operations of the concern must be controlled by one or more economically disadvantaged women (for EDWOSBs) or women (for WOSBs).

WOSBs and EDWOSBs will be required to self-certify their status in the Central Contractor Registration (CCR) and the Online Representations and Certifications Application (ORCA) as other small businesses do, and will also be required to post certain documents to the WOSB Program Repository.

There are eighty-three NAICS codes designated as eligible for Federal contracting under the WOSB Program, of which forty-five in which WOSBs are underrepresented and thirty-eight in which WOSBs are substantially underrepresented. The anticipated award price of contracts eligible for this program cannot exceed $5 million in the case of manufacturing contracts and $3 million in the case of all other contracts.

Surety bond will be required on all construction contracts awarded over $100,000, and WOSBs are encouraged to get Prequalified for bonding ahead of time.

Surety Bond Associates makes it easy to get Prequalified. Simply Apply Online, or Contact Us TODAY!

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