Food Stamp Surety Bond
The Supplement Nutrition Assistance Program (SNAP, previously known as food stamps) helps millions of Americans get enough to eat by providing financial support to help purchase food and groceries. Any business that participates in the SNAP program needs to obtain what is known as a food stamp surety bond, which essentially holds that business accountable for following all rules and regulations applicable to the SNAP program. This page explains everything you should know about food stamp bonds.
What is a Food Stamp Bond?
All surety bond types, including food stamp bonds, are legally binding agreements between three different parties. The party that must obtain the bond is known as the principal. As the bondholder, they are liable for paying all valid claims filed against the bond.
The party that creates the food stamp bond requirements is the US Department of Agriculture (USDA). They are known as the obligee. If the principal fails to follow the rules of the SNAP program, the obligee may file a claim against the food stamp bond seeking compensation equal to any damages caused. The principal must then pay for this claim under the terms of the bond agreement.
The party that underwrites the bond is known as the surety. As the underwriter, the surety agrees to pay the obligee for valid claims in the event that the principal can't or won't pay. After paying, the surety will use whatever means necessary to collect the settlement amount from the principal, who always has financial liability for claims regardless of whether or not they agree to settle.
Debts to the surety must be repaid in a timely manner with interest and fees added to the original settlement amount. Failure to repay the debt results in loss of bond coverage (which makes it illegal to continue participation in the SNAP program) and could lead to a lawsuit as well.
Who Needs to Obtain a Food Stamp Bond?
Any retail food business that participates in the SNAP program – meaning they agree to accept SNAP benefits in lieu of traditional payments for food purchases – must obtain a food stamp bond with coverage equal to at least $1,000 or 10% of the average monthly SNAP purchases over a 12-month period. Anyone required to get a food stamp bond only needs coverage for their first year in business.
Food Stamp Bond Cost
The cost of a surety bond is a small percentage of the coverage amount, so a food stamp bond with $1,000 in coverage will typically have a premium as low as $100.
How to Get a Food Stamp Bond
Most bond seekers only need to complete a standard bond application to obtain this type of surety bond, then pay the premium quoted by the surety.
Food Stamp Bonds From Viking Bond Service
As a nationwide surety with years of experience improving the bonding process, Viking Bond Service makes it fast and easy to comply with surety bond requirements in all 50 states. Complete an application, contact us with questions, or call 1-888-2-SURETY (1-888-278-7389) to speak to a bond expert.
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