As Surety1 we often get calls asking what it takes to get bonded. While there are hundreds of types of surety bonds, contractors in public works need performance and payment bond when awarded a contract. And prior to being awarded the contract, they usually need bid bonds in order to properly bid on public works projects. This is one of the many barrier of entries contractors face when doing business in the public sector. The good news is that if you have excellent credit and been in business for 3 years, qualifying for bonds up to $500,000 is very easy under Surety1’s credit based application. Here is a guide to getting your first bond.
Applying for this bond will take 10 minutes. It’s a 2 page application asking for the following:
Send to our staff for next step. It’s as easy as that.
Once you complete the application to Surety1 staff, it goes into underwriting. Because this is a credit based application designed for the infrequent bond user, this process usually takes less than 24 hours, and often same day with excellent credit.
An agent will contact you with any clarifying questions or to let you know you have been pre-qualified for bonds up to $500,000.
Once approved for bonds, the last step is to sign the indemnity agreement. This agreement is required for all bonds. It is the guaranty of the company along with the personal guaranty of the owner and spouse against any loss to the surety. Unlike insurance, surety assumes and expects zero losses, and this indemnity agreement provides this assurance. The surety is simply ‘financially backing’ the work of the contractor, and would only do so if that contractor was willing to stand behind their work. The indemnity agreement achieves this.
The cost of getting pre-approved for bonds, or to go through the underwriting process is free. Once you are set up, you will be given a bond rate, which is 2.5 -3% for these credit based programs. This rate is only the cost of the performance and payment bonds. By getting pre-approved, you will know the cost of the bond and how much you can qualify for. Knowing this will allow you to factor in this cost to your bid to pass along to the owner.
This easy process to obtain performance and payment bonds helps lessen the barrier to entry many face in public works. Apply now on our website, or call us at 877-654-2327 anytime to speak to a surety professional.