Food and Nutrition Service Bond - USDA in All States

Brief Summary

If your store was disqualified from SNAP or paid a civil money penalty in place of a long disqualification, FNS will not reauthorize you until a collateral bond or bank letter of credit is on file. The bond gets you back to accepting SNAP without parking cash with a bank for five years.

Under 7 CFR 278.1(b)(4), USDA's Food and Nutrition Service requires a collateral bond or irrevocable letter of credit as a condition of reauthorization from a firm previously sanctioned under the SNAP retailer rules. The face value is the greater of $1,000 or 10 percent of the firm's average monthly SNAP redemptions in the 12 months before the most recent sanction, and it must be valid for five years.

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How to Apply for a Food and Nutrition Service Bond:

• Confirm your sanction history triggers the bond under 7 CFR 278.1(b)(4).
• Total your SNAP redemptions for the 12 months before the most recent sanction.
• Set the bond at $1,000 or 10 percent of average monthly redemptions, whichever is greater.
• Get a five year bond payable to the Food and Nutrition Service, U.S. Department of Agriculture.
• Submit the bond to FNS with your reauthorization request and any penalty payment.

Detailed Information About the All States Food and Nutrition Service Bond:

Who has to post it

This bond is not for every SNAP retailer. It applies when a firm comes back into the program after a sanction. Under 7 CFR 278.1(b)(4), FNS requires it if the firm was withdrawn or disqualified for more than six months, paid a civil money penalty in place of a disqualification of more than six months, or was sanctioned before and picks up another sanction of any length. A buyer or transferee of a disqualified store does not have to furnish a bond before authorization just because of the purchase.

How much

The face value is $1,000 or 10 percent of the firm's average monthly SNAP redemption volume for the 12 months before the effective date of the most recent sanction, whichever is greater. A store that averaged $40,000 a month in redemptions would need a $4,000 bond. The bond must be valid for five years from re-entry into the program.

Terms the bond must meet

The bond has to be issued by a bonding company recognized under the law of the state where the store does business and be represented by a negotiable certificate. It is payable to the Food and Nutrition Service, U.S. Department of Agriculture. The surety cannot cancel it for nonpayment of premium. FNS holds the bond until it is released after the firm's authorization is withdrawn with no fiscal claim against the firm. An irrevocable letter of credit from a commercial bank can be used instead.

The bond does not replace penalties

Posting the bond does not reduce any civil money penalty or earlier fiscal claim. A firm paying a civil money penalty furnishes the bond along with the payment or payment schedule. If a bonded firm commits a later violation, FNS can recover against the bond. The agency's website now uses the name Food and Nutrition Administration. Confirm the current form and filing steps with your FNS retailer office before the bond is issued.

Eligibility and Requirements for an All States Food and Nutrition Service Bond:

• Surety recognized under the law of the state where the store operates.
• Bond represented by a negotiable certificate.
• No cancellation by the surety for nonpayment of premium.
• Valid for five years from re-entry into SNAP.
• Civil money penalties and fiscal claims still paid in full.

All States Food and Nutrition Service Bond FAQs:

Official and Additional Resources for the All States Food and Nutrition Service Bond: