Provides access to quality bid, payment and performance bonds
Louisiana Economic Development’s Bonding Assistance Program provides access to quality bid, payment and performance bonds at reasonable rates from surety companies when bonding capacity is needed on public or private jobs.
- Offers 25% of contract price or $100,000, whichever is less, in bond guarantee to surety
- The default mitigation fund will provide recipients up to $40,000 of that guarantee, or 10 percent of the contract price, whichever is less, in mitigation funds
- Sureties perform all underwriting and offer competitive rates
- LED’s Bond guarantees may mitigate some risk to surety company, leading to a positive underwriting decision
Eligibility
The Bonding Assistance Program is open to all certified Small and Emerging Business Development (SEBD) Program clients that require bid, payment or performance surety bonds.
The Process
Getting Started
Application
Apply for the Small and Emerging Business Development (SEBD) Program at www.ledsmallbiz.com.
Resources
Free program to help new and emerging construction businesses learn how to qualify for surety bonds. Click here for more information.
Information
For more information on what a surety bond is, please visit the following booklet online.
For additional information about what is needed to obtain a surety bond, please view the following webinar.
Next Steps
Contact the Bonding Agent
Contact the bonding agent working with the Bonding Assistance Program to begin the underwriting process. View a list of available bonding agents.
Provide initial documents and submit to the bonding agent for review. Initial information generally requested by the bonding agent can include:
- Contractors Surety Application Questionnaire: Provided by the bonding agent to be filled out by the applicant with general business information and history.
- Business Financial Statements: Provide the last three fiscal year-end of either Certified Public Accountant (CPA) prepared company financial statements. If not available, please provide the last three years in-house balance sheet and profit & loss as well as the company tax returns (or personal tax returns – if the business profit and loss is included in personal tax returns).
- Interim Financial Statement: The most recent in-house balance sheet and profit & loss for current year, if year-end company financial statement is more than 90 days old.
- Personal Financial Statement: Personal financial statements from all owners of the company no older than 90 days. Bonding agent may provide form if one is not available.
- Credit Authorization Form: Provided by the bonding agent.
Surety Company
The bonding agent will notify you of the surety company’s decision and if the Bonding Assistance Program is needed (bond guarantee and or default mitigation funds). The bonding agent, on behalf of the surety company, will issue bid, performance and payment bonds should you receive favorable underwriting results.
For more information on what a surety bond is, please visit the following booklet online.
Free program to help new and emerging construction businesses learn how to qualify for surety bonds. Click here for more information.
Eligibility Scenarios
I am SEBD certified and need a bond. Do I qualify for a bond?
You do qualify for the Bonding Assistance Program. However, the State does not issue bonds. The surety company will determine if you are bondable and whether or not a bond guarantee is required.
I filed for bankruptcy a few years ago. Am I still eligible for this program?
The only eligibility requirement is certifying as a SEBD. The surety company will determine how credit scores, bankruptcy and other parameters impact the underwriting of your application.
I have a cleaning company and need a bond to enter the homes of clients. Can the Bonding Assistance Program help?
No, this program is designed to help with acquiring bid, payment and performance surety bonds. It does not assist with other types of bonding requirements.
I need a performance and payment bond by tomorrow. Can the Bonding Assistance Program help?
No, it takes at least seven business days to finalize all of the needed paperwork from the surety company and the bank issuing the bond guarantee.
Bonding Assistance FAQs
What is a surety bond?
A surety bond is a promise to pay one party (the obligee) a certain amount if a second party (the principal) fails to meet some obligation, such as fulfilling the terms of a contract. The surety bond protects the obligee against losses resulting from the principal’s failure to meet the obligation. For more information on what a surety bond is, please visit the following booklet online.
What type of surety bond does the Bonding Assistance Program cover?
The Bonding Assistance Program covers bid bonds (guarantee that a contractor will enter into a contract if awarded the bid), performance bonds (guarantee that a contractor will perform the work as specified by the contract) and payment bonds (guarantee that a contractor will pay for services and materials).
Does this program write surety bonds?
This program does not write surety bonds and does not participate in the surety company’s underwriting procedure. The Bonding Assistance Program is a source of collateral to mitigate risk to the surety company.
How does the Bonding Assistance Program work?
The Bonding Assistance Program provides collateral to the surety that could mitigate the surety’s risk and result in issuance of required bonding capacity.
I haven’t gotten my contractor’s license yet. Are there any programs that can help me get my license?
Yes, the Louisiana Contractors Accreditation Institute, a partnership between Louisiana Economic Development, Louisiana Community and Technical College System and the Louisiana State Licensing Board for Contractors, offers access to training across the State with focus on expanding understanding of the construction industry.
How do I qualify for the Bonding Assistance Program?
You will need to apply for the Small and Emerging Business Development (SEBD) Program in order to qualify for the Bonding Assistance Program and then contact your bonding agent to start the underwriting process with the surety company.
What surety companies and surety agents can I contact after I get SEBD certified?
The surety company and agents that signed on for the Bonding Assistance Program can be found here. If you already have a surety agent, your agent can contact a surety company for approval to work with the Bonding Assistance Program.
Can this program help me if I am able to get limited bonding capacity?
Yes, the bond guarantee could help the surety increase your aggregate bonding capacity.
Can I use the default mitigation funds for mobilization?
No, it can only be accessed between draws and cannot be used for mobilization.
How can I access the default mitigation funds?
Reach out to a participating bonding agent to determine bonding capacity and request necessary application. Complete surety application and submit to the surety company for underwriting. Based on the underwriting decision, the surety company will issue the default mitigation funds to an account managed by the funds control entity on behalf of the contractor that can be accessed after the first draw on the contract.
Small Business Services
Please reach out to LED’s Small Business Services department for more information about the program.