What is a Surety bond?
A surety bond is a three-party agreement wherein the Obligee (owner) requires the Principal (you) to post security (bond obtained from the Surety) to guarantee performance under a contract, court order or license.

Why must I furnish so much financial data to get a bond?
A bond is not an insurance policy. It involves providing a guarantee to the Obligee. Therefore, the Surety Company must underwrite the bond very strictly. Any default is ultimately collected from the Principal. The surety company merely acts as a go-between. Many bonds require not only corporate backing but also personal backing of company owners.

How can I establish a bond line?
In order to set up this type of arrangement with a Surety Company, you must first provide all of the necessary documents (typically: CPA prepared financial statements, bank line letter, references, resumes of key employees). Upon review and acceptance, the Surety Company will assign a single job and aggregate bond limit for your account. This is a convenient method for bond-active contractors to secure bid and performance bonds.

How long does it take to get a bond?
With an established bond credit line, new bonds can be issued within 3 to 48 hours (depending on the size and complexity of the need) right here in our office.

To establish a credit line with a Surety for complex performance and financial guarantee bonds, it could take as little as three business days to as much as thirty days.

What is a bond claim?
This is a demand for payment by the Obligee to the Surety Company. It usually means that a job is not going according to plan or that a supplier has not been paid. If the Surety Company makes a payment to the Obligee on your behalf, they will then turn to you to indemnify (make them whole).

How can a "start-up" company qualify for bonding?
It is more difficult, but not impossible, for new companies to secure bonding . In addition to pro forma financial statements, the surety would require personal indemnity of owners and spouses along with some form of collateral. This can be in the form of a certificate of deposit or letter of credit, obtained from your bank, which is held by the surety as security for your bond(s). Once the job is completed and the Owner releases the bond requirement, your collateral can be returned to you from the Surety company.

How are bonds underwritten?
Complex performance bonds and financial guarantees (Surety Bonds) are underwritten using many of the same criteria used by commercial bankers when making corporate loans. Detailed financial and operational data must be assembled to clearly demonstrate to the surety that your company has the financial and operational resources and experience to fulfill its obligations.

Administrative and fidelity bonds can be issued with minimum data and underwriting.