Secrets of Bonding #113: Your 1st Bond – Choose Door #1 or 2?

Brought to you by…

Secrets of Bonding is brought to you by Bonding Pros

Need a bond?  Talk to the Pros!  856-304-7348  www.BondingPros.com

Brokers protected.  Contractors welcomed.

Every week we get inquiries from contractors who need their very first bond.  This is a great question and one we love to answer.  It is particularly gratifying to give a new client their first bond – of many!

There are different paths forward depending on the circumstances.  Each door has different aspects.  Let’s go over them.

Door Number 1:open_door3

Use this door for contracts (federal and all others) up to about $350,000.  This is the fastest / easiest program with the first bond approval coming over in about 1 day!  Only a one page application is needed – no financial statements.  The program is predicated on the work being simple and normal for the contractor, and personal credit reports of owners and spouses must be acceptable.

This door is perfect for companies that are not pursuing contracts in excess of $350,000.  Other applicants can also use it as a quick way to start while completing the application process for higher amounts.

As with all the doors, there is no charge to get pre-qualified for bonding!

Door Number 2:

This is for contracts up to about $750,000.  Similar to Door Number 1, but now add “in house” company financial statements and / or tax returns. A longer questionnaire is needed, and supporting documents such as resumes, references and personal financial statements may be required.

Door Number 3:open_door1

For contracts in the $750,000-1,000,000 range, plan on a CPA prepared Compilation statement.  This is the lowest level (least expensive) CPA financial report.  It is needed once per year.

Door Number 4:

Contracts over $1 million may require an annual CPA Review financial report.

Number 5:open_door5

For large contracts in excess of $10 million, a CPA Audit may be required by the underwriters.

It makes sense that as the obligations become larger, higher quality, more complete information is needed.

Is there some flexibility?  Sure!  It may not seem so, but underwriters are motivated to be flexible and find ways to write the business.  After all, no bonds = no revenues.  They must find ways to say yes – occasionally.

What value does your professional surety agent add?  We have the markets and the relationships to get things done.  We know each underwriter’s appetite and the type scenarios they will support.

Need your first bond?  Choose the door and walk through with us!

Call us today and let’s get started: 856-304-7348

Not available in all states.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s