Construction professionals at work

In order to work on a public project, be it local, state, or federal, a general contractor must obtain surety bonds. These bonds protect the awarding authority by ensuring the full performance under the contract and assure subcontractors, suppliers, and any other down the chain laborers that they won’t be stiffed when it comes time for payment. These requirements flow from the Miller Act for federal projects and Little Miller Acts on state and local projects. While these bonds go a long way to protect awarding authorities and subcontractors, general contractors do not receive the same protection. What’s more, the bonding process can be intimidating and seem exclusive to smaller contractors or those who typically work on private projects. Just yesterday, a bill was signed in New Jersey to combat this issue. The new legislation will make it easier for small businesses in New Jersey to obtain surety bonds.

The Bill

The bill, S-123/A-3559, calls for the New Jersey Economic Development Authority to establish the “Small Business Bonding Readiness Assistance Program.” As mentioned above, the program will aid small business that might be unfamiliar with the bonding process by guiding them through bonding requirements and educating these businesses on the process to obtain surety bonds.

The Small Business Bonding Readiness Assistance Program (SBBRAP) will do so though support programs and assistance including: improving small businesses’ financial presentation; helping to improve the businesses’ operational efficiency, profitability, and bonding capacity; and educating small businesses on the aspects surety bonding subject through workshops and consulting sessions

Specifics of the program have not quite been settled, but the New Jersey Economic Development Authority will be in charge of establishing the terms and conditions under which a business may apply for the program. The authority will also be in charge of establishing and maintaining the “Small Business Bonding Readiness Assistance Fund,” which will provide grant funding for small businesses participating in the program, as well as provide funds to SBBRAP for support services/ assistance and administration costs. The fund will be established with public funds as well as public and private donations.


This new legislation is great news for smaller contractors looking to work on public projects. While the prices of surety bonds on public projects may be going down in the future, that contractors will now have a tour guide to help them navigate the bond process will alleviate the administrative burden that smaller contractors face. Further, the public will also benefit from lower prices on public projects as a greater number of contractors will be competing for the jobs.

For more on surety bonds and legislation that requires them, we also have a Bonds tag on the blog as well more posts on the Miller Act and Little Miller Acts.

New Jersey Bill Helps Small Businesses Obtain Surety Bonds
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New Jersey Bill Helps Small Businesses Obtain Surety Bonds
A New Jersey bill makes it easier for contractors on public projects to obtain surety bonds. The bill aims to help small businesses compete for projects.
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Lien Law News
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