JOHNSON CITY -- Middle Tennessee State University's Tennessee Small Business Development Center may soon offer free workshops to contractors interested in bidding on contracts that require bid, payment, and or performance bonds. That interest is now being determined.

Small businesses needing surety bonds to compete for construction and service contracts can qualify for U.S. Small Business Administration (SBA)-backed surety bonds of up to $5 million as a result of the Recovery Act -- more than double the previous $2 million maximum surety bond guaranteed by SBA.

Clint Smith, SBA district director for Tennessee, said in a press release, "SBA has increased the opportunity so that small contractors and service businesses can compete on contracts by guaranteeing the bond issued by the surety company.

"Under this partnership between the SBA and the surety company, SBA provides a guarantee to a participating surety company of between 70 and 90 percent of the bond amount. This helps small businesses that would otherwise be unable to obtain bonding in the traditional commercial marketplace."

Patrick Geho, Tennessee Small Business Development Center (TSBDC) State Executive Director, added: "A surety bond is a three-way agreement between the surety company, the contractor, and the project owner to ensure the completion of the project.

"The SBA can guarantee surety companies against a percentage of losses sustained if a contractor defaults on a construction project."

Those interested in learning more about the surety bond guarantee from the SBA should contact Bob Justice, director of the TSBDC at East Tennessee State University, at 423-439-8505.