Surety Bonds and Tax-Exempt Bonds through the SBA


Small businesses and companies are often looking for funding opportunities. While the Small Business Administration, or SBA, can help business owners obtain loans, it is not the only method of managing expenses. Bonds are another way that companies are able to bring in cash for expansion.

Surety Bonds:

Surety bonds are issued by the small business to parties who are interested in investing in the company by buying the bonds. This type of bond requires signing an agreement with a surety company to help protect the interests of the buyer. The Principal, who is also called the Contractor, is the company who will receive the funds. The surety company offers a guarantee to the buyer that even if the company is unable to abide by the terms of the bond, the surety company will follow through and ensure the buyer receives the interest.

In some situations, the bonds are guaranteed by the Small Business Administration. The SBA acts as a surety company to provide buyers who invest in the bond with a guarantee that the terms set forth in the original agreement are carried out.

Tax-Exempt Bonds:

Another type of bond that a company might issue to raise funds for necessary expansion or upgrading is a tax-exempt bond. The tax-exempt bonds are not guaranteed by the SBA; instead, the bonds are issued by the state or local government. The bonds are sold to the general public and the money provided by the bonds to the company is used for the projects. The company must then pay back the funds according to the terms of the bond. In most cases, it will provide a set period of time before the repayment occurs.

This type of bond is only made available to companies who are in manufacturing or to non-profit organizations. Since the purpose of the bond is job creation, it has very specific eligibility requirements.

Bonds are a type of loan and the business must repay the funds. Companies who are not yet well enough established to qualify for SBA guaranteed or tax-exempt bonds can opt for a loan from UnsecuredBizLoan .com. UnsecuredBizLoan provides small business loans to companies who are not eligible for traditional loans or bonds.

To apply for funding for your small business, use the form on the right to begin the application process.

For more information, go to SBA at

Surety Bonds and Tax-Exempt Bonds through the SBA was last modified: March 7th, 2012 by Amit Kraidman
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