Louisiana Economic Development has announced the addition of a Bonding Assistance Program. The program is an effort to help small businesses in the state compete for construction jobs through access to performance and payment bonds. The program will offer bid bonds at a reasonable price to allow smaller firms to bid on public and private jobs.
The surety program offers competitive rates and will offer $100,000 or 25% of the contract price on bond guarantee.
The program will offer smaller construction companies greater access to major construction projects in the state. Increased competition may be able to lower the price of construction jobs across Louisiana.
Bonding Assistance will be provided to woman-owned and minority businesses. Veterans will also have access to the program. Small businesses of any type, in the construction industry, can apply for assistance and all certified clients of the Small and Emerging Business Development Program will be eligible for assistance.
Lack of bonding capacity is a key barrier for small and new subcontractors, making it difficult to find work on substantial projects. The project allows small businesses without much collateral to obtain bonding in the state.
Payment bonds will guarantee that the contractor will be responsible for the payment of materials and services. Bid bonds will provide a guarantee that the contractor will agree to the contract if the bid is awarded. Performance bonds will also provide surety that the contractor will perform work that is specified within the contract itself.
The bonding program is a way to mitigate risk to a surety company, but the program does not engage in the writing or underwriting of bonds. Contractors that have limited bonding capacity will be able to use the program, too.
Applications must be sent into the Small and Emerging Business Development Program in order to qualify for the Bonding Assistance Program.
If approved, the business will be allowed to contact a bonding agent that will request the application into the assistance program on behalf of the company.
Louisiana is working with local legislators to help small businesses in the state continue to grow. The state’s small businesses employ 917,000 people and is a key factor in the state’s unemployment rating falling from 5.8% in January 2017 to 4.6% in January 2018.
Louisiana’s small businesses are responsible for 53.2% of the state’s private workforce employment, and lawmakers are focusing on supporting the sector with new government programs. Small businesses with less than 20 employees experienced the largest job creation of small businesses in 2015, creating 11,659 out of 16,849 jobs.