Many general contractors have implemented the bonding of sub contractors as an added layer of protection. Even with long time relationships, subcontractors are being asked to provide performance bonds. The good news is that the Subcontractor Surety Bond is readily available within the surety marketplace. Surety1 represents over a dozen surety markets that are willing to provide surety credit to subcontractors.
The surety can be a great resource for the subcontractor too. The surety will routinely review the contracts subs are being asked to sign and often times will point out onerous terms. The bond forms to be used are a consideration of the surety as well.
For performance bonds of $300k and less, Surety1 has markets available that require little more than an application of a few pages. This assumes good credit and the company must have been in business for at least 3 years. The surety underwriter will want to review the contract and bond forms too. While most of these “fast track” programs carry rates of 3%, Surety1 has markets available where highly qualified contractors can qualify for lower rates and larger programs. If a company does not meet these requirements, Surety1 may still be able to place the bond, however, additional terms, conditions, and underwriting information requirements may apply.
The larger the bond the more information that contractor wil ave to provide. Over $300k, but under $1mm, a contractor should be prepared to provide basic financial information, including a personal financial statement, corporate financial statement, bank statements to verify cash, and a completed contractor questionnaire.
While the on-line application does not provide enough information for the surety to do a complete underwriting of an account, Surety1 will be able to at be in a position to to determine if a contractor is even able to qualify for a performance bond, the estimated terms, and what additional information will be required to finalize the deal.
To speak to a Subcontractor Bonding Expert, call (877) 654-2327 and ask for the contract department.
Support federal bid-listing legislation! Ask your member of the U.S. House of Representatives to co-sponsor H.R. 1778, to end practices like post-award “bid shopping” and “bid peddling” on federal construction projects. For more information, visit the American Subcontractors Association website.