Category: Business Service Bond

Maximizing Bonding Capacity as a Federal Contractor

For many growing federal contractors, increasing bonding capacity is the key to qualifying for larger government contracts. While credit-based (Fast-Track) bond programs are an excellent starting point, they eventually limit growth through lower single-project limits, rigid aggregate caps, and higher premium rates. To compete for larger federal opportunities, contractors typically transition to a standard surety program that evaluates the financial strength, operational capacity, and experience of the entire business rather than primarily relying on the owner’s personal credit. The result is higher single-project limits, significantly greater aggregate capacity, more competitive premium rates, and the flexibility needed to win larger federal construction contracts. Quick Answer: How Do Federal Contractors Increase Bonding Capacity? Federal contractors increase bonding capacity by upgrading to CPA-reviewed financial statements, maximizing working capital (Current Assets minus Current Liabilities), retaining earnings to build tangible net worth, and demonstrating a clean track record of completing progressively larger projects. Sureties evaluate your business across the Three Cs—Character, Capacity, and Capital—to determine higher single-project and aggregate bonding limits. Credit-Based Bond Programs vs. Standard Surety Programs While credit-based programs bypass deep corporate analysis to issue fast bonds for smaller jobs, a standard surety program requires a comprehensive underwriting evaluation of your entire...

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By Surety Bond Professionals

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Key Action Items to Achieve an Effective Bonding Program

With the new $1.2 Trillion Infrastructure Bill in Manufacturing, Construction, and Energy passed, many contractors are looking for ways to diversify their backlog with government contracts so their businesses can remain operational during an economic recession and/or another potential industry slowdown. A major attraction to public work is that government construction projects are always available and the fact that payment is almost guaranteed. The Federal Prompt Payment Act protects all tiers of contractors, subcontractors, and suppliers from late payments on federally funded construction projects. Though it would be naïve to suggest that payment is made 100% on time, the projects are ALWAYS 100% financed. There is no fear of banks cutting off financing or owners running out of money. One of the requirements for bidding and performing public work is surety bonding. Under the Miller Act, construction bonds are required for contractors performing on federal projects over $100,000. Similarly, every state has its own “Little Miller Act” which specifies the contract amount above which construction bonds are required. The different types of construction bonds that will be required are: Bid Bonds, Performance Bonds and Payment Bonds. To be successful in the public arena, the single most important thing a...

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By Surety Bond Professionals

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Business Service Bond – Apply Now

The U.S. service sector is a growing industry and has expanded over the last decade.  A service industry includes any form of outsourcing, such as human resources, IT, leadership development, home cleaning services, in home personal care, etc.  If a company outsources, it is important that they protect themselves from any form of negligence or fraud. Benefits of Bonding So what are the benefits of requiring a bond for a business that you work with?  The first is to protect yourself from liability due to an employee committing fraud when dealing with a customer.  Another reason, is that you give your customers added assurance by letting them know that your employees or the businesses that you work with are bonded, which could potentially bring in more business.  If a business is taking the extra steps to protect their customers, it helps to build a positive reputation.  In comparison to a standard fidelity bond, a business services bond protects for on-premises incidences. Summary: The service sector is growing exponentially.  Therefore, many businesses are  hiring additional outside employees to continue providing their business’ services to their customers. A business services bond provides protection against any sort of fraudulent or negligent work by...

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By M L

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