As stimulus money is doled out, contractors search for bonding - Minneapolis / St. Paul Business Journal:

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This is particularly true for womem and minoritybusiness owners, who have facefd splotchy access to bonding opportunities. “It’s been a historicall problem inour community,” said Marc Little, presidengt and CEO of MWELA, the Minority Women Educational Labor Agenchy in Lawrenceville. And since the stimulus bill passed in demand forthe organization’s bond progran has markedly increased, he MWELA offers bid, payment and performance bonds to companiees in its Sheltered Bond program, which turns two years old in During that time, 11 contractors have receive more than $11 million in bonds from the agencyy for work on 46 different projects.
As part of the contractors have to spend five hours a montjh for six months at a business development claszs through Universityof Pittsburgh’s Institute for Entrepreneuria Excellence. The average surety bond is around $300,00p0 to $400,000, but the agency can go up to $1 millionh per project per company. For projectw larger than that, theres is the Small Business Administration’s bond program, recently enhancef by the Recovery Act to help contractorsx bidding on projects upto $5 The previous limit was $2 million. For companies biddingh on federal stimulus the SBA can guarantee bondinfg upto $10 million.
But bonding succes s often isn’t enough to get the job said Carl Knoblock, district director for the SmalBusiness Administration’s Pittsburgh office. “The challengse is they may be able toget bonding, but they may not be able to get the he said. Bonds guarantee that a third partgy will compensate theowner — the governmeng agency, in the case of stimulu projects — if the contractodr doesn’t perform, for whatever Many bonded companies, especially the smaller ones, still need a line of creditg to hire employees and buy materials to carry out government which don’t provide up-front cash.
“When lenders already are not evenif it’s assured and it’se bonded” it may not be funded, Knoblock warned.