Category: Surety Bond

How to Upgrade Your Bonding Capacity from a Fast-Track Program to a Standard Program

Typically, contractors that require small and infrequent, or one-off performance bonds apply for a Fast-Track Program. This application process is quick and simple and does not require much financial or underwriting information. It is ideal for contractors that need construction bonds under $500,000. Approval is based primarily on the applicant’s credit score and a completed application can be approved by the surety company within a day. A Standard Bond Program, however, requires more complex financial information and cost systems from the contractor and takes more time for the surety to approve. So why would a contractor want to upgrade to a larger, more traditional Standard Bond Program? Firstly, the Infrastructure Investment and Jobs Act is anticipated to revitalize America’s infrastructure and drive significant job growth in the construction industry over the next few years. It will modernize and upgrade our roads, bridges, ports, and other key infrastructure assets desperately in need of repair. A Standard Program will enable a contractor to take on these larger government projects* which require construction bonds, thus procuring more work for their pipeline. Secondly, a contractor can save money by securing a lower bond rate. Fast-Track bonds are typically charged at a higher rate...

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By SEO Team

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To Bond, License and Insure?

Starting your own construction business can sometimes be a leap of faith. But that faith in your business is stronger if you learn about the industry.  For example, it is important to know the benefits of being a licensed, bonded and insured construction company. Why should I be licensed and apply for permits? The simple answer is for protection, for you and your customers. It may be easier to cut corners and not apply for permits or licenses. But, if you want to have a long standing and respective business, licenses and permits are the way to go. First, you will need a general business license.  Beyond that, it is important to check with your local government and state offices to see which other license you may need. Permits are important because they help you to maintain valid parameters. By pulling a permit, you have sought the approval of your local government offices to perform the work that your customer wants. What about insurance, do I need insurance? How many insurances you need depends on the work you perform. If you directly employ workers, then you will need an insurance to protect yourself. If you drive your truck for...

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By M L

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Surety Bonds and Insurances: Are They the Same?

There are many who confuse surety bonds with insurances, as they are both a means to protect finances.  But, in their execution of this goal, they serve different purposes.  Confusing the two or using them interchangeably can stop your business from growing.  In the world of construction, constructions projects may require a surety bond.  With that in mind, the public construction sector is always building and is a good avenue for a contractor to grow their business.  And even many private sector construction jobs require surety bonds.  Having a knowledgeable surety bond producer can help you to grow your business.  Consider them an important tool in your tool box.  Here are some important things to know: A surety bond is a contractual agreement between the project owner or client, the contractor or business and the surety bond producer. The surety bond producer ensures that they have vetted the business and that they are financially sound.  If the business owner does not fulfill the contractual obligations, then the client can file a claim.  If found to be in default of the contract, the client will then receive financial compensation. Surety bonds and insurances are NOT the same thing. Therefore, when...

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By M L

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Surety Bonds and Insurances, Working Together

We have recently rolled out a program to partner up with insurance agents to get their clients the best surety bonds in the industry. So why should YOU work together, as an insurance agent, with Surety Bond Professionals? Well, we’re glad you asked! We offer access to the best carriers. We have been in the field for over 25 years. This has allowed us to form respectful relationships with many surety companies. This puts us in a position to work out deals for difficult-to-place bonds. This translates into better terms, more capacity and better rates for YOUR clients! We pay the highest commissions. We want your business and know you work hard. Thus, we share 30-40% of the premium with you for referrals on ALL bonds your accounts bring in. We treat you and your clients with the utmost respect. Clients, prospects and partners should be treated well. We value our “business family” and consider every one of them to be a part of it. So you can be ensured that you and your clients are in the best care in the business! Much of business is about relationships. The people you work with on a daily basis are...

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By M L

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history of surety bondsSurety Bonds

History of Surety Bonds

Surety bonds are such a regular part of our business world today that it is hard to imagine a time where we didn’t have them.  In a previous blog, we mentioned that the first form of a surety bond occurred in 2750 B.C.  We wanted to investigate a little more about the history of surety bonds.  So, join us, as we take a short trip down surety bond memory lane! 2750 B.C. It all starts with our farmer friends in Mesopotamia, where one friend goes off to serve in the army and creates an agreement with another farmer to take care of his fields while he is away. In order to ensure this, a third party (a merchant) guaranteed that the second farmer would uphold his agreement. Later, in 2400 B.C. we find our first written surety bond, on a stone tablet. The surety guaranteed that one party would pay the other party. Fast forward a few hundred years, to 1790 B.C. and we find the law Code of Hammurabi, with the first legal surety document. We’re moving along here to 670 B.C. where we find our first written surety contract, written closer to how we understand surety bonds...

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By M L

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A Quick Guide to Surety Bond Terms

Once you have made the decision that a surety bond can help grow your business, knowing the basic construction surety bond terms can help to expedite the application process.  And, it also helps to know which bond you will need for specific parts of the project.  Yet, if looking for a more comprehensive description, our other blogs on the topic can help. What is a Bid Bond? A project owner may require this bond when bidding for a job.   Usually needed in public construction projects, it ensures that the bidder is able to complete the job at their proposed bid. What is a Payment Bond? This bond protects those associated with the jobs.  This may include other contractors, subcontractors, laborers and material suppliers. What is a Performance Bond? This ensures that the job will be completed as per the contractual stipulations. What is an Ancillary Bond? Not used as often as the previous bonds, this bond covers specifications not mentioned in the contract.  For example, stylistic elements. What is a Subdivision Bond? A project owner may require this bond to cover such projects as replacing a sidewalk or sewer system. These five terms can help you to decide which...

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By M L

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Surety Bond Vs Letter Of Credit – What’s The Difference?

There are many financial products that help a construction company to grow, both in the private and public sector.  Two of these products, a surety bond and a line of credit, can be helpful in becoming more successful.  Knowing the difference between the two can help your business to grow. Surety Bonds vs Lines of Credit To start, both surety bonds and lines of credit (LOCs) provide financial protection. Yet surety bonds tend to take that protection a step further.  By definition, a surety bond is a three party agreement between the project owner, the surety bond producer and the contractor.  Two of the most utilized surety bonds in the industry are performance bonds and payment bonds.  A performance bond ensures that the contractor upholds the contractual obligations specified in the contract.  A payment bond guarantees that the contractor pays all associated with the project.  This can be anyone from laborers to subcontractors, material suppliers and other employees as specified in the contract.  A LOC is a cash guarantee.  It allows the owner to call upon it on demand.  It works as a payment to the owner, but is an interest loan for the contractor. A surety bond is based...

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By M L

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Is there a Difference Between Surety Bonds and Insurances?

Have you been told that a surety bond is the same as insurance?  Or that insurance is better than a surety bond in the field of construction?  There are contractors, who feel, that construction bonds are not necessary in order for their business to succeed.  Unfortunately, these are often the same contractors who do not see as much business growth as bonded contractors.  All public construction projects required surety bonds.  Since the public construction sector is a reliable industry it is an industry worth working in.  In addition, in recent years, many private sector construction jobs have also began to require surety bonds. What are the main characteristics of insurances and surety bonds? First, we would like to debunk the myth that bonds and insurances are the same thing.  Many people assume, incorrectly, that the term “bonded” and “insured” are interchangeable.  In the case of the contractor, an insurance policy usually refers to liability insurance or workers’ compensation.  They do not protect the project owner, but rather the workers.  For many clients, hearing that a contractor is also bonded, gives the project owner confidence that they will be protected, in the case that the contract is not satisfactorily completed....

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By M L

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Why your Relationship with your Surety Bond Producer Matters

Your relationship with a surety bond producer is like any relationship.  It needs to be a good match for what you are looking for.  A healthy relationship with your surety bond producer can be beneficial.  It can help lower your stresses at work and help your business grow.  But, what should you be looking for in a surety bond producer?  Unfortunately, there are no “match making” surety bond websites.  So we’ve outlined some things to keep in mind when choosing who will be your perfect surety bond producer match. Qualities to Look For First, if you are under the impression that surety bonds are not mandatory, you may actually be losing out on a lot of business.  Research has shown that the public construction industry is always growing and has consistent work.  A huge difference between public and private construction work is that public construction work requires a surety bond.   This is not always the case in the private sector. Having a surety bond producer, who looks out for you and guides you is tantamount to success for any construction company.  A surety bond producer can also help you to better understand certain terms.  Think of them like...

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By M L

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Surety Bond Producer as Your Advocate

The worst outcome has happened, you have had a claim filed against your business.  What to do now?  As this can be a stressful time, having someone in your corner can help lift a huge weight off your shoulders.  This is where a surety bond producer as your advocate can be of enormous help. A basic claim procedure begins when someone associated with the job files a claim against you.  They will look over the evidence. If the claim has no backing to it, a surety bond producers acts as an advocate.    The best way to help your surety bond producer is to make sure to document everything.  This includes that you pay for labor or materials on time to when you complete certain aspects of the project.  If you have done your end of the job, then the surety bond producer will help to prove that the claim is false. There are many attributes to look for when working with a surety bond producer, and below we have highlighted some things to consider.  Therefore, if someone does file a claim  against your company, you can be certain that your surety bond producer will protect you and that you...

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By M L

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