The Small Business Administration (SBA) recently announced important changes that will allow its grantees to expedite the submission of Work-In-Process (WIP), which small businesses must submit when receiving bonding support through the Surety Bond Guarantee (SBG) Prior Approval Program.

Additionally, through the SBA Surety Bond Guarantee program, in partnership with specialized companies and agents, small businesses that would not otherwise qualify can access bonds. It is important to remember that surety bonding is required for any company to bid on most major construction projects.

“SBA’s Surety Bond Guarantees are critical for small businesses to be able to qualify, compete for, and complete major projects—including many of the improvement projects being funded as part of President Biden’s $1.2 trillion Infrastructure Investment and Jobs Act (Bipartisan Infrastructure Law),” said Isabel Casillas Guzmán, SBA Administrator. 

SBA Endorsement

In addition to the bipartisan CHIPS and Science Act, which was recently signed by President Biden with the goal of boosting local manufacturing and production, lowering costs for Americans by bringing supply chains home, and creating high-paying union jobs, the renewal of the Surety Guarantee Program also represents real support for small businesses seeking to compete in an increasingly challenging economy.

“Streamlining and simplifying these Work-in-Process submissions will make it easier for more small businesses—especially those in historically underserved communities —to participate in the SBG program, seize these infrastructure opportunities, and continue to lead the way in building a stronger, more equitable, and resilient American economy,” added Casillas Guzmán.

Simpler Processes

An example of paperwork simplification occurs when small businesses, which are part of the SBG Program, and the bail bond agents acting on their behalf, provide WIP reports to the SBA that contain detailed information about each project that the company is developing. Data reported to the SBA includes contract price, estimated start and end dates, cost of completion, and billing to date.

Patrick Kelley, Associate Administrator for the SBA Office of Capital Access, noted :

Ultimately, these small business-friendly improvements will be a game-changer for our nation’s small business owners.

Previously, information was manually entered into the SBA's Capital Access Financial System (CAFS) by licensed bond brokers, collateral partners and small businesses. Because a single WIP report can include dozens of projects and require long periods of time to submit manually, the new system offers an optional process that allows the use of a spreadsheet application to prepare WIP information in a machine-readable format, eliminating the need for manual data entry.

Those who use this process can update a small business’ WIP in seconds, regardless of the number of projects contained in the report.

More Americans are applying to start new businesses than ever before. Last year, Americans applied to start 5.4M new businesses – 20% more than any year on record. Collaborative community spaces like Entrepreneurs Sandbox at @HTDCorg help entrepreneurs start, grow and thrive. pic.twitter.com/ykWCyGTn8A

— Isabel Guzman (@SBAIsabel) August 25, 2022

New Technology

The new automated process is based on an open, non-proprietary data format called XBRL (Extensible Business Reporting Language), used by 60 global regulators, including the Federal Deposit Insurance Corporation (FDIC), the Federal Energy Regulatory Commission (FERC) and the Securities and Exchange Commission (SEC).

The WIP XBRL data standards, called the WIP Taxonomy, were developed by the XBRL US Security Working Group, a committee of XBRL US, a nonprofit standards organization dedicated to improving reporting efficiency for businesses and governments. Sponsoring organizations for the task force include Altova, Construction Progress Coalition (CPC), Crowe LLP, IAT Surety, Liberty Mutual Surety, NASBP (National Association of Surety Bond Producers), and Travelers and Zurich Insurance. SFAA (The Surety & Fidelity Association of America) participates as an observer.

“We’re very pleased to roll out this new process. The SBA’s Surety Bond Guarantees are going to drastically change the way small businesses gain access to funding opportunities,” said Kelley. 

Through these new processes, the SBA can guarantee bonds on construction, service and supply contracts and subcontracts for up to $10 million per project. In a matter of hours, all procedures can be completed and receive approvals on SBA bond guarantee issues for contracts up to $400,000, all through the streamlined QuickApp.

Reactions

“SBA programs, like the Surety Bond Guarantee Program, are designed to help small businesses thrive and grow. Modernizing our systems will improve efficiencies for bond agents, small businesses, and surety companies and expand our ability to support the entrepreneurs and innovators that run these businesses. We encourage everyone using the SBG Program’s electronic application system to use this automated process to save time and effort,” said Jennifer Vigil, Acting Director for the SBA’s Office of Surety Guarantees.

“NASBP has been encouraging greater automation for years, and so we are elated with SBA’s decision to embrace the automation of WIP report data, which will help all bonding stakeholders. We look forward to working towards expanding the use of digital data standards into other aspects of the surety bonding process,” stated Mark McCallum, CEO, National Association of Surety Bond Producers.

“We commend the SBA for leading this important initiative and look forward to our continued collaboration with the SBA and working group on modernizing and improving the Surety Guarantee Plan Program. By automating the WIP reports and future components of the surety bonding process, small businesses will more efficiently meet their bonding needs while increasing the productivity of surety professionals,” pointed out Lee Covington, SFAA President and CEO.