Surety Bond Improvements Act of 2006
Senator Olympia J. Snowe (R-ME) has proposed legislation to make changes to the SBA's surety bond program. Is this a good or bad thing for the surety industry and the contractors guaranteed by their bonds?
Philadelphia, PA (PRWEB) September 12, 2006 -- The chair of he Senate Committee on Small Business and Entrepreneurship, Senator Olympia J. Snowe (R-ME), introduced the “Surety Bond Improvements Act of 2006.″ Senator Snowe's proposal is designed to bring the SBA's surety bond program up to date. The legislation will increase the amount of small businesses written through the program. It will also increase the amount of bonding companies participating.
The senator asserted, “My legislation will help ensure that small businesses are able to obtain the surety bonds they need to compete for government contracts and create jobs. These necessary program changes will help revitalize the SBG program and make it easier for small business to fulfill their contractual obligations.”
The bill allows contractors obtaining bonds through the program to go after larger contracts by increasing the bond limit from two million to three million. It also makes sure that previous bond claims from the SBA program will not be declined, a vital part of the bill, as denial of such claims would invalidate the program for future contracts.
The proposed legislation will also make price controls and rate requirements on the Preferred Surety Bond program a thing of the past. If the SBA increases fees, they will be required to make any study used to justify such an increase available to the public.
The bill is meant to bring the SBA program up to date. The limitations of the program have not been revised for quite some time. Inflation slowly knocks smaller contractors out of larger jobs over time.
Senator Snowe's proposal is expected to be passed into law this year. Overall, professionals within the surety bond industry are pleased with the program, as it allows for more flexibility in a conservative industry. Without the SBA's program many contractors would not qualify for bonding. The changes make it so bond agents have more flexibility for their clientele for larger contract bonds, especially for contractors that should not be able to obtain surety credit using standard industry underwriting procedures.
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