need bonding for a construction project?
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Bonding is a big issue for small businesses. Often the issue of securing adequate bonding for a project is a major obstacle for small business owners, who often don’t know where to go or how to secure bonding for their construction businesses, particularly where government contracting opportunities require the firm to be bonded.

Bonding & Technical Services, Inc. (or BTS as it known by its participating contractors) is a surety bond and technical support program for Nebraska. BTS works closely with the U.S. Small Business Administration (SBA) and can assist participants in obtaining bonds that are guaranteed by the SBA’s bond guarantee program. The Nebraska office of BTS was established in 1998. Over the past two program years it has helped businesses secure more than $5.2 million in bond lines and $9.2 million in individual bonds.

BTS is a race-neutral program and is open to all eligible construction or construction-related, small businesses, not just minority-owned small businesses. The surety bond and technical support program was designed to increase the participation of small disadvantaged business in government contracting opportunities. BTS has helped businesses gain opportunities to work on city, county, and state contracts, as well as contracts with the Omaha Public Schools, the University of Nebraska Medical Center, the University of Nebraska at Omaha, and Metro Community College.

BTS Services

BTS works with the purchasing departments of government entities and large businesses to help them identify opportunities where small contractors can work to demonstrate their abilities. BTS will use their database to help agencies find qualified small contractors and, in turn, will notify these small contractors of the opportunities. BTS also offers small construction contractors training classes on topics such as how to read blue-prints, how to prepare estimates, how to prepare change orders and comply with contractual terms, how to report sales and use taxes, and how to manage business and personal finances so as to be attractive candidates for bank financing. BTS also offers one-on-one training to businesses in specific areas as necessary. All training is offered free to qualified small contractors. BTS also has an engineer on staff who advises small contractors in how to resolve on-site problems. This is an especially valuable service for small businesses that can’t afford to hire the services of a professional engineer.

All of these valuable services offered by BTS keep small, Nebraska-based contractors working on projects and lowers the overall cost of public projects by identifying local subcontractors that can do the work. It also helps to “recycle” money in our local communities.

Who Writes the Bond?

One distinction to make is that BTS doesn’t write the bonds needed by subcontractors, but rather helps to assess companies’ intangibles that make them capable of being bonded. The actual bond underwriting is through a private insurer, such as the Davis Agency and other bonding companies.

BTS helps companies to maximize their bonding capacity by assisting them in restructuring debt to make them attractive to lenders. Winsley Durand with BTS says that sometimes just a little “tweaking” can make the difference in whether a company is able to get bonded. BTS helps secure bond lines for clients so they know how much bonded work they can take on at any given time, thus saving their clients time and effort when determining whether to bid projects.

Durand says there are three primary keys for small contractors to secure bonding. These keys are: 1) good credit history, 2) previous project experience on projects of similar size and scope, and 3) the availability of adequate collateral. Durand notes that bonding companies are some of the most conservative companies out there (perhaps more conservative than banks) because they want to insure a zero loss ratio. He says another important key for small contractors is to, “Do it [the work] right and pay all the people to be paid.” With good credit, good quality work and work reputation (which includes paying employees and suppliers on time) and adequate collateral (such as facilities and equipment), the small contractor is a candidate for securing the bond necessary to grow the business to the next level.

Durand says that trades people are often competent in their trades, but not necessarily good businesspeople, since they don’t have the business training. That’s where BTS attempts to assist them through their training programs

Bonding companies typically want some liquid assets, such as cash and certificates of deposit, and it is this requirement that is a tough one for small contractors, particularly for start-up companies. Durand says for small contractors to secure bonding, the two biggest hurdles generally are having adequate collateral and demonstrating the requisite experience on similar projects. That’s where BTS can help small contractors by notifying them of projects where they realistically can demonstrate their capability and gain the experience they need. BTS also has a non-profit loan program. Through this program, BTS assists clients with getting the financing they need to grow their businesses through less traditional sources, such as factoring, so the businesses can grow to a point where they can eventually “graduate” to more traditional sources of financing, such as loans and lines of credit with banks or finance companies.

Since 2003 to the present time, the loan program has issued 74 loans totaling approximately $950,000. These loans have generated $5.6 million in construction contracts and have resulted in an economic impact to the local economy of greater than $12 million.

Bonding Seminar

A bonding seminar, with special guest Kathleen Piper, Deputy District Director of the Omaha office of the U.S. Small Business Administration, will be offered on Wednesday, May 24 th from 4:00 – 6:00 p.m. at the BTS office. The Bonding & Technical Services office is located on the northwest corner of 90 th and Blondo, on the western-most side of the Camelot Business Center. The seminar will provide information on obtaining bonding, expanding current capacity, and the services offered by BTS & SBA. Pre-registration is required.

If your company is seeking assistance in securing a surety bond, BTS may be able to help you. For assistance, call Winsley Durand at 402-399-9090, Ext. 117, or e-mail winsley.durand@daviscompanies.com.