A new state program aims to help small construction companies gain access to larger jobs by giving them assistance in obtaining bid, payment and performance bonds.
Louisiana’s economic development department, the Louisiana Surety Association and the Louisiana Public Facilities Authority are teaming up for the Bonding Assistance Program. For qualifying companies, the state will guarantee the first 25 percent of contract value, up to $100,000, to limit a surety company’s risk in providing a bond.
LED will not underwrite the bonds, a surety company will have to decide if a construction firm is a good risk based on standard underwriting criteria. Instead, LED will offset the risk in providing bonds to smaller companies that might have trouble obtaining bonds because of a lack of collateral.
“If we can make it easier to put smaller, local, minority-owned and women-owned businesses to work, our communities and our state will benefit,” said Gov. John Bel Edwards. “This program will remove one hurdle for qualified small businesses that hope to grow and thrive.”
Contractors that are certified clients of LED’s Small and Emerging Business Development Program will be eligible for the program, which was made possible by a low-interest loan from the LPFA.
LPFA is providing the seed money for the program to allow LED to guarantee bond applications for qualifying businesses. When jobs are complete and the funds are released by financial institutions, LED will return the money to the pool for re-use with other qualifying companies.
Information about the Bonding Assistance Program is at OpportunityLouisiana.com under incentives.