For Immediate Release

Date: June 4, 2009

For More Information: David Doyle, (901) 333-5086

Surety Bond Guarantee Could Spur Construction Growth

Southwest Tennessee Community College's Tennessee Small Business Center announced today that it will offer free workshops to contractors interested in bidding on contracts that require bid, payment and or performance bonds. "Small businesses that need surety bonds to compete for construction and service contracts can qualify for U.S. Small Business Administration (SBA) backed surety bonds of up to $5 million as a result of the Recovery Act, which is more than double the previous $2 million maximum surety bond guaranteed by SBA. These workshops are another example of how the Tennessee Small Business Development Center (TSBDC) is making every effort to assist our business community to become more competitive during this national economic downturn," said TSBDC Executive Director David Doyle.

"SBA has increased the opportunity so that small contractors and service businesses can compete on contracts by guaranteeing the bond issued by the surety company. Under this partnership between the SBA and the surety company, SBA provides a guarantee to a participating surety company of between 70 and 90 percent of the bond amount. This helps small business that would otherwise be unable to obtain bonding in the traditional commercial marketplace," said Clint Smith, SBA district director for Tennessee.

"A surety bond is a three-way agreement between the surety company, the contractor and project owner that ensures the completion of the project. The SBA can guarantee surety companies against a percentage of losses sustained if a contractor defaults on a construction project," according to Patrick Geho, TSBDC state executive director.

The following are descriptions of the different surety bond products:

The Bid – Bond, which guarantees that the bidder on a contract will enter into the contract and furnish the required payment and performance bonds.

Payment – Bond, which guarantees payment from the contractor of money to persons who furnish labor, materials equipment and/or supplies for use in the performance of the contract;

Performance – Bond, which guarantees that the contractor will perform the contract in accordance with its terms.

Ancillary – Bonds which are incidental and essential to the performance of the contract.

The TSBDC will conduct a surety bond workshop at the Renaissance Business Center on Saturday, June 13, 2009 starting at 8:00 a.m. The center is located at 555 Beale Street Memphis, TN. To register call 901-333-5085 or go to www.tsbdc.org.