Some contractors find it challenging to obtain surety bonds, which can put them at a disadvantage in competing for and securing jobs. New York has established a program to assist them in getting the surety bonds they need for projects sponsored by state agencies or agencies of the City of New York. The New York Surety Bond Assistance Program (known as NYSBAP) provides a guarantee of up to 30% on bid, payment, and performance bonds through Empire State Development. The guarantee can also be used to secure a bond line.
Who is Eligible for NYSBAP?
The eligibility criteria for NYSBAP address the size, credit, financial condition, experience, and ownership of a contracting business. Specifically, the contractor or contracting firm must qualify as a small business or MWBE (Minority or Woman-Owned Business Enterprise), with:
- Gross average revenue of at least $400,000 in each of the preceding two fiscal or calendar years but not more than $5 million in the most recent year
- A minimum credit score of 600
- At least two years of business history and experience doing the same kind of work as required by the contract opportunity in question
Certain criteria also apply to the bond line or surety bond for which a contractor can receive an NYSBAP guarantee:
- A maximum bond line or project size of$2 million
- The project must be sponsored by an agency of the state of New York or New York City
Understanding the Pre-Assessment Process for the NYSBAP
The approval of a given contractor to participate in NYSBAP is not solely the result of meeting a surety company�s underwriting requirements. Empire State Development also reviews every application. To get an idea as to whether you might be eligible for NYSBAP, complete the pre-assessment questionnaire.
NYSBAP offers programs in partnership with New York State Small Business Development Centers for contractors aiming to qualify for NYSBAP guarantees. One-on-one technical assistance as well as classes and workshops are offered at various locations throughout the state.
The Application Process
The detailed eligibility guidelines provided by NYSBAP identify certain documents a contractor may need to furnish in support of an application. The application itself is available on the NYSBAP website in both PDF and MS Word formats. Once your application is completed, send it to Empire State Development. Please note that a manual signature is required in order for an application to be considered.
How Much Does It Cost?
There are no fees or costs associated with the bond line and bid bond guarantees from Empire State Development. Payment and performance bonds are a different matter. For those guarantees, the surety company issuing those bonds may require an Irrevocable Letter of Credit from a participating bank, which typically carries a charge to the contractor of approximately 1%. That charge is in addition to the bond premium the contractor will pay to the surety company.
Single Source Insurance Can Help
We are more than happy to accept bond guarantees issued by Empire State Development through the NYS Bond Assistance Program. Contact us today to see what we can do for you.