Tag Archives: surety bonds

Surety bond guarantee hike seen as boon for small business

The Connecticut Business & Industry Association reports that small businesses will have more contracting opportunities beginning in 2017. A law recently signed by President Obama increases the maximum Small Business Administration surety bond guarantee percentage from the current 70 percent to 90 percent.

“This is the first significant legislative change to the surety bond guarantee program in several decades,” says Frank Lalumiere, surety bond guarantee program director at the SBA. “It will provide increased incentives for surety bond companies and bond producers to participate in the program, which will expand contracting opportunities for small businesses across the country.”

Surety bonds protect project owners in the event a contractor fails to successfully perform the contract. In such an event, the surety company assists the project owner in completing the contract.

The SBA does not provide direct surety bonds to small businesses; surety companies do. But through its Preferred Surety Bond program, the agency guarantees between 70 and 90 percent of the losses and expenses incurred by the surety company if the small business fails to complete the contract. This government guarantee encourages the surety company to issue a bond that it might otherwise not issue. In turn, with the backing of a surety bond, a contractor may bid on a project that otherwise it could not bid on.

Original Source: http://www.centralctcommunications.com/newbritainherald/article_97a7ed64-b8d8-11e5-865e-63255e5dfc14.html

 

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Carwash Owners Sue New York City Over New Surety Bond Rules

A group of carwash owners have filed a lawsuit against New York City charging a new law illegally favors unionized carwashes.

The Association of Car Wash Owners lawsuit centers on rules that require owners of nonunionized carwashes to post $150,000 surety bond before obtaining a license. Unionized operations pay only $30,000.

The association says the two-tiered system is illegal.

Association attorney Michael Cardozo tells The New York Times the rule gives those who have collective bargaining a competitive edge.

He says “governments can’t put their thumb on the scales of whether a company should unionize or not unionize.”

The union-supported Car Wash Campaign, which represents community groups, said the $150,000 bond is “designed to secure worker wages against wage theft, and to protect consumers and possible creditors.”

The city Law Department says it will review the merits of the complaint but believes the law serves to protect low-wage workers.

Original Source: http://www.insurancejournal.com/news/east/2015/10/22/385822.htm

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