WASHINGTON–The Small Business Administration's bond guarantee program should be continued because it provides an essential bridge between small and emerging potential contractors and the bonding these companies require, a surety industry official testified before Congress yesterday.
Bill Peterson, vice president and public policy officer of CNA Surety Corporation, made his remarks in testimony before the U.S. House Committee on Small Business.
Representing CNA Surety, the Surety & Fidelity Association of America and the American Insurance Association, Mr. Peterson spoke to the committee as part of a continuing effort to win reauthorization by Congress of the Small Business Act.
The act expired some time ago, and the SBA is operating on a continuing resolution that expires Dec. 31 as Congress works to extend and overhaul the program.
Yesterday's hearing was among a number of sessions being held by the panel as part of the reauthorization and overhaul effort, according to Lenore Marema, vice president government affairs for the S&FAA.
Mr. Peterson testified that the program is "critical" because of the infrastructure needs in the United States. "Small and emerging contractors can play an extremely important role in the necessary construction and repairs, but the SBA Program itself is in need of revitalization at a time when it is needed the most," Mr. Peterson said.
He explained to the committee that surety bonds play a key role in assuring that qualified contractors perform the needed work and that workers and suppliers on the jobs will get paid.
Fees were raised recently for sureties and small businesses participating in the program in order to cover the losses of the SBA, he testified.
"Congress has never asked that the program be self-sufficient, and it stands to reason there will be losses in the program during difficult economic times," Mr. Peterson testified.
"The guarantees are to encourage sureties to write bonds for contractors who otherwise would not be able to obtain a surety bond," he said. Other years, when there are few contractor defaults, the program actually could make money, he added.
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