Business Bonds
As a business owner, and you have contract work, you are often asked to supply a surety or Performance bond. A surety/performance bond protects you against the costs of claims about shoddy, incomplete work, failure to supply according to your contract, as well as theft and fraud. You may need to purchase a bond as a means of getting a contract, business license or permit.
Key Requirements of Surety Bonds
Surety bond requirements vary. These bond requirements also differ based on the specific requirements of the obligee. For example, obligee requirements could be the details of a construction project for a bond with a construction contractor.
Different Types of Bonds
A look at common types of surety bonds.
- A bid bond guarantees that the person/company who puts in the best bid on a project will enter into the contract.
- A performance bond guarantees that a business will perform according to the terms and conditions of the contract.
- A payment bond guarantees that the business will pay materials suppliers and subcontractors for the work they do on the contract.
- An ancillary bond guarantees factors that are incidental and essential to the completion of a contract. One example is a maintenance bond, which guarantees that your small business will fix any defects in workmanship and materials within a specific time frame after the completion of the project.
How to Qualify
For your business to qualify for a bond you need to supply us with different documentation. See more details below.
To qualify for a bond, you will need:
- Technical skills and good management. We will look at past projects and might check internal management and accounting records. Your past experience indicates your ability to complete future projects.
- Financial statements. We will look at the net worth and profitability of your small business.
- Credit. We will at times also review the credit histories of individual business owners.
We will update you on the requirements during the application process.