Posts Tagged ‘bonding’

Surety Bond Answers

Tuesday, July 28th, 2009

I need a surety bond, and I don’t know what type I need? An easy way for you to find out what type of bond you need, besides calling us, is to call the obligee.  The Obligee will have the direct answer since they are the entity that is requiring to carrier the bond. Normally if you are applying for a license it is a State Department.  Permit may be needed by the state as well, but most of the time it is the city whom needs them.  It is also helpful to check your application that must be returned to the state. The licensing packet usually has a copy of the bond form and its requirements.
How much will my Surety Bond Cost?
The Cost of your surety bond depends. The Rate is determined by State, type of Bond, you credit, your personal financials, business financials and risk. All scenarios are different so some of the above listed information may be required or not. Some bonds like, notary bonds are not based on credit or financials. Notary bonds simply have a filled rate, were other bonds have a sliding scale.  The reason for that is unlike MVD bonds , contractor license bonds, and Mortgage broker bonds, notary bonds  claim ratio is low for now.  So the cost of the bond may start out at a 2% but the rate can jump up to 25% depending on your scenario.

Why do I Need a surety bond?
A surety bond does not protect you or your business, it protects the obligee. The obligee requires Surety bonds to protect them from, monetary compensation, breach of contract, payment of certain taxes, fraud and whatever else they have weaved into the bond form.  Unlike insurance surety bonds are a requirement and must be met before you can start or continue operating your business.

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Different bonding needed for contractors

Friday, June 5th, 2009

What is bonding?
Bonding is where a principal obtains an extension of surety credit. In most cases when you refer to bonding you are referring to a contractor that has obtained bonding for their business like a bond line.

What is a Bond Line
A bond line is where the contractor has a line of surety credit to be used for future construction projects. Underwriting for performance bonds can be a long process but if you a bond line you do not have to reapply for every bond or bid bond you need.  When you have established a bonding relationship with the surety the surety normally requests updated financials every quarter.

What is a Bid Bond
In order to obtain a bid bond you must first qualify for what the final bond will be. There is some confusion about bid bonds.  You must qualify for the total contract amount not just what the bid bond will be. So if you need a $10,000 bid bond the surety is not underwriting off of that amount, but what the final bond will be. Usually a bid bond is an percentage of the total contract amount so if your bid bond is $10,000 and it is   5% of the total contract amount the final bond needed would be $200,000. So the surety will underwrite your application off of the final contract amount

What is a Final Bond
A final bond is also called a payment and performance bond. A final bond is when you have been awarded a bid. The bid bond than turns into the final bond you must sign the final bond reflecting the full contract amount and turn the bond into the obligee.

What is a Contractor license bond
A contractor license bond is a state requirement giving you the legal ability to perform constructions jobs in the state your business is operating in.  Obtaining a contractor license bond is usually the last step for the state to grant you your license.

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Who is in need of a Fidelity Surety Bond

Wednesday, April 15th, 2009

Who is in need of a fidelity bond

fidelity bond is a type of security that covers policyholders for any losses that they earn as a result of deceptive acts by particular individuals. It generally insures a business for losses that is caused by the corrupt acts of its employees. While the called bonds, these obligations so as to protect an employer from the employee-dishonesty losses. This type of insurance policies guard from losses of company money, securities, and other kind of property from the employees who have an obvious intention to cause the loss of a company.

There are also a lot of other forms of crime-insurance policies (burglary, general theft, fraud, computer theft, disappearance, forgery, fire, etc.)inorder to protect the company belongings. Anybody who can’t get a job without bonding is suitable for aid by the fidelity bonding program. All those who have, in past, committed a fraudulent act, are qualified for bonding services. These people include ex-addicts and ex-offenders, as well as other people who have very poor personal credit, also persons who lack a work history, and those who were disgracefully discharged from the military.

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Tips on How to Obtain a Surety Bond

Friday, April 3rd, 2009
Over the course of the last two years the surety Bond Industry has under gone dramatic changes. Due to increasing claims caused from suffering industries such as the car industry and the mortgage industry Surety Bonding Companies have to tighten their belts. Bonding companies are now enforcing tougher requirements and are increasing rates to compensate for their losses. Due to underwriting changes many teetering clients that had preferred rates will now be placed in the subprime market. Many established companies that had a preferred rate last year cannot qualify this year for same price or their rate has gone up. New businesses are suffering the most because preferred rates are now only for established companies. Collateral is also coming to play with many surety companies requiring it for the majority of the surety bonds they write for new business. With that said here are a few tips to help you obtain a surety bond without collateral and at a reasonable rate. Tip one: if you are a new business and you do not have a business financial prepared create a start up business financial and create a business plan as well. A start up business financial or a business plan with some companies may help you with the rate by one or two points. Tip two: send a resume Surety companies what to see experience. Showing experience may help you get out of subprime pricing. Tip three: If your credit is a little shaky or your financial s are not up to pair apply with a co-signer. When applying with a co-signer make sure that the cosigner can qualify. Here are a few qualifications for co-signers. Clean credit with no collections or delinquencies a 650 credit score or higher owning property and real estate. The real estate does not need to be owned free in clear. Keep in mind if you have a co-signer you will not be able to obtain preferred pricing but it may help you get a price break. Tip four: Use a surety bond broker your local insurance agent may not have the markets to help you since surety bonding is a specialty field. Many surety bond agents have programs that can obtain surety bonds for new business with no collateral.
Surety Bond types can be confusing you can learn more I have been writing Surety Bonds for over 10 years

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