Do You Know What A Surety Bond Is?
What is Contract Surety:
A contract surety bond is a three-party agreement where the surety assures the project owner or general contractor (obligee) that the contractor (principal) will perform the specified contract.
Since most likely you are the principal, the surety is assuring the project owner that you will fulfil the contract. To do that the surety needs to prequalify your company to determine if they can provide support. The surety will look at your business financial statements, credit, job history, work on hand, project financing and the contract requiring the bond, along with other things to underwrite each bond.
Most public work will require a Performance and Payment Bond with a Bid Bond submitted at the time you bid. Private work doesn’t always require a bond but has been increased in recent years.
3 there are Basic Types of Contract Surety Bonds:
Bid Bond - provides that the bid is issued in good faith and that the contractor will provide the required performance and payment bonds if provided a contract.
Performance Bond - provides protection to the owner from financial loss should the contractor fail to perform the contract in accordance with the terms and conditions.
Payment Bond - provides assures that the contractor will pay specified subcontractors, laborers and suppliers on the project
How to I qualify:
To begin the process of determining your qualifying surety bond support we will need the following information depending on the size of the bond:
Bond Request Form
Work In Progress Report
We will also need:
3 years of Business Financial Statements or tax returns
Current Personal Financial Statement on each owner
Verification of bank line of credit (if available)
Personal resumes or prior job references
We are here to help:
Our professional surety bond department is dedicated to guiding you through the bonding process with the goal to establish and foster a great relationship between your business and a surety company. Our approach is a bit different; we’ll help you understand what it takes to build surety credit so your business can continue to grow.