Prioritizing infrastructure investments creates millions of jobs in the United States, expanding growth on a national and local level in both the short and long term. It also underscores a growing need for qualified bonded small businesses and opportunities for new and emerging construction companies, including minority-owned and other underrepresented businesses.

As part of the recently passed Infrastructure Investment and Jobs Act (IIJA), the White House outlined $550 billion in new spending for roads, bridges, public transportation, electric-vehicle charging stations and other physical infrastructure—and small businesses will be essential to completing those projects. Further, the U.S. Department of Transportation’s Federal Highway Administration recently announced $10 million in funding from the Fiscal Year 2021 Disadvantaged Business Enterprise/Supportive Services program to help eligible small businesses compete for federal highway contracts in 45 states, as well as in Washington, D.C., Puerto Rico and the U.S. Virgin Islands.

To take advantage of upcoming work opportunities, these businesses will need to be prepared with not just resources but also contractual and risk-management tools, such as surety bonding—and resources are readily available to help simplify and streamline the process.

Three Cs of Bonding

The benefits of bonding are many for contractors of all sizes, but particularly small and emerging companies. These bonds open the door for public bid opportunities and create a competitive advantage over non-bonded contractors on private projects. It’s an opportunity to demonstrate performance to a broader range of owner and construction organizations—which means more work. With a little preparation, the process can be simplified into three categories: character, capacity and capital. Understanding these three Cs will set you on the right path.

Character: From a surety perspective, character is largely about financial trust. Make sure your business and personal credit are strong, ensure personal and business bills are paid on time and know your credit score.

Capacity: Capacity is exactly what it sounds like: Do you have the people, processes and equipment to handle the project on which you’re trying to bid? It’s vital to develop an overview showing your capacity to do the project and provide the appropriate capacity-related documentation to your surety bond producer. These include information about your employees, copies of all required licenses and certifications, projects, equipment, operations and risk-management plan.

Capital: Your surety bond underwriter will also want to assess your capital position. Make sure you have the necessary financial statements readily available, such as balance sheets, income statements and cash-flow statements, as well as other business records, such as tax returns, payroll, and banking and investments documents.

Agent of Change

Anticipating the information an underwriter will ask for goes a long way to taking the stress out of the process—as does a quality bond agent, who can help you through the process of gathering the proper information. The agent has access to a wide variety of resources, both technical and financial, to assist contractors.

There are a few simple items to remember when you first meet with your agent. These include: 

• Tell your story.
• Describe your experience.
• Discuss your competitive advantage.
• Discuss your strengths and weaknesses.
• Explain why you’re interested in the project.

For account underwriting, each surety company requires different documents and information. Your surety bond producer will tell you exactly what is needed for your account underwriting.

Industry Support

As with all business opportunities for new and emerging contractors, education and mentoring are essential steps in engaging minority- and women-owned business opportunities. To this end, Title I of the Minority Business Development Act authorizes the Department of Commerce’s Minority Business Development Agency to provide minority-owned businesses with management resources and technological assistance as well as financial, legal and marketing services. 

In addition, earlier this year, The Surety & Fidelity Association of America (SFAA) and the National Association of Surety Bond Producers teamed up to launch the Contractor Bonding Education and Mentoring Program to help improve opportunities for small, new, emerging, minority-owned and other disadvantaged contractors:

Education: On-demand interactive eLearning modules are available 24/7, so individuals can learn at their own pace. On average, it takes three to five hours to complete the entire program.

Mentoring: Once the online course is completed, a contractor will be eligible to participate in the mentoring program to receive expert advice from industry professionals.

Specialized Surety Bond Education for Contractors

To learn more about this free, interactive, online program, visit surety.org/news/surety-industry-launches-contractor-bonding-education-mentoring-program.

The new program is endorsed by industry organizations such as Associated Builders and Contractors, Associated General Contractors of America and the National Association of Minority Contractors. “Diversity is a business imperative,” says SFAA President and CEO Lee Covington. “Getting bonded helps these organizations grow their business—it’s good for the individual companies and the construction ecosystem.”