[Federal Register Volume 84, Number 157 (Wednesday, August 14, 2019)]
[Notices]
[Pages 40466-40467]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-17442]
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SMALL BUSINESS ADMINISTRATION
[Docket No.: SBA-2018-0007]
Surety Bond Guarantee Program Fees
AGENCY: U.S. Small Business Administration.
ACTION: Notification of extension of temporary initiative to test lower
fees for an additional year.
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SUMMARY: This document announces a one-year extension of the temporary
decrease in the guarantee fees that the U.S. Small Business
Administration (SBA) charges all Surety companies and Principals on
each guaranteed bond (other than a bid bond) issued in SBA's Surety
Bond Guarantee (SBG) Program.
DATES: The temporary initiative to test lower fees in the SBG Program,
which is currently in effect through September 30, 2019, will be
extended for an additional year to apply to all SBA surety bond
guarantees approved through September 30, 2020.
FOR FURTHER INFORMATION CONTACT: Jermanne Perry, Management Analyst,
Office of Surety Guarantees; (202) 401-8275 or [email protected].
SUPPLEMENTARY INFORMATION: Under its SBG Program, the SBA guarantees a
certain percentage of bid, payment, and performance bonds for small and
emerging contractors who cannot obtain surety bonds through regular
commercial channels. The SBA guarantee incentivizes Sureties to provide
bonding for small businesses and thereby assists small businesses in
obtaining greater access to contracting opportunities. Pursuant to its
statutory authority to ``establish such fee or fees for small business
concerns and premium or premiums for sureties as it deems reasonable
and necessary,'' and to administer the SBG Program ``on a prudent and
economically justifiable basis,'' 15 U.S.C. 694b(h), SBA assesses a
guarantee fee against both the small business concern (the Principal)
and the Surety and deposits these fees into a revolving fund to cover
the program's liabilities and certain program expenses.
SBA's rules provide that the amount of the fees to be paid by the
Surety and the Principal will be determined by SBA and published in
Notices in the Federal Register from time to time. See 13 CFR 115.32(b)
and (c) and 115.66. On July 30, 2018, SBA published a notification in
the Federal Register (83 FR 36658) that announced that, for all
guaranteed bonds approved during the one year period beginning October
1, 2018 through September 30, 2019, the Surety fee would decrease from
26% of the bond premium to 20% of the bond premium, and the Principal
fee would decrease from $7.29 per thousand dollars of the contract
amount to $6 per thousand dollars of the contract amount (the decrease
in the Surety and Principal fees referred to, collectively, as ``lower
fees''). SBA invited comments on this temporary initiative and received
a total of eight comments, with six comments from surety companies and
agents and two comments from trade associations, all of which expressed
support for the lower fees.
SBA has determined that it requires more data to fully evaluate the
effect of the lower fees on the SBG Program. Accordingly, to provide
more time to gather and evaluate the requisite data, SBA is announcing
a one-year extension of the temporary initiative to test the lower
fees. The lower fees will now apply to all bond guarantees (other than
bid bonds) approved through September 30, 2020. During the additional
year that the lower fees are in effect, SBA will evaluate how the lower
fees affect the SBG Program, including program utilization by surety
companies, surety agents and small businesses; the size and
characteristics of the portfolio; and the risk level of the program,
including cash flow and defaults. After carefully reviewing program
performance with the additional data, SBA will determine whether the
guarantee fees should remain at these reduced amounts, if they should
revert to the higher amounts, or if they should otherwise be changed.
[[Page 40467]]
Authority: 13 CFR 115.32(b) and (c) and 115.66.
William M. Manger,
Associate Administrator, Office of Capital Access.
[FR Doc. 2019-17442 Filed 8-13-19; 8:45 am]
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