How to Get Your First Bond, Part 1

This publish is a part of a collection sponsored by Previous Republic Surety.

Congratulations! Your development consumer has gained the bid for a brand new mission that’s greater and higher than any earlier than. In reality, they’re able to graduate from a Quick Bond program to a regular contract bond. You’re each excited, but in addition, understandably, a bit nervous. Right here’s data it is best to share along with your consumer. You’ll additionally discover just a few hints about your personal subsequent steps as you transition from property-casualty company solely to a full-service company with a rising specialty in surety enterprise. We’ll share half 2 of this weblog subsequent time.

Are you prepared on your first surety bond?

Perhaps you’re bidding in your first public mission, or the financiers of a non-public job require a bond. You could have beforehand certified for a Quick Bond program, which is accessible for small tasks, however now you’ve graduated to plain contract bonds.

You’re in all probability a bit anxious about going by means of a full underwriting course of. However with slightly data and a few preparation, being examined by a surety firm generally is a constructive expertise that places your development enterprise firmly on the trail to development.

Begin by getting your self an expert surety agent. Discuss to the property-casualty agent who insures your small business. They could be very educated in regards to the surety world. Or maybe the company they work for has brokers who specialise in bonds. If not, ask for a referral.

Different good referral sources embrace your banker, your CPA (when you’ve got one) or fellow contractors who do bonded work. One other great spot to discover a surety agent is the Nationwide Affiliation of Surety Bond Producers (NASBP), which maintains a surety agent locator. Brokers who’re members of NASBP are leaders within the surety trade and will definitely give you the option that can assist you.

Why a surety agent is vital

The extra skilled the surety agent, the better it’ll be so that you can get a bond. Listed below are 4 explanation why it is best to work with an agent who focuses on surety:

1. They know what surety corporations need from contractors. They can assist you put together a profitable and well timed submission.
2. They’ve entry to a number of surety markets and know which of them are almost certainly to be the most effective match.
3. They’ve developed relationships with surety underwriters, which might facilitate your bond approval.
4. They know the best way to analyze monetary statements and might level out your organization’s monetary strengths and weaknesses.

Pulling collectively your monetary data

You may get a head begin on the bonding course of by gathering your organization’s pertinent monetary data. A educated development CPA can produce the correct statements you’ll want.

Listed below are the gadgets you’ll be requested to supply the surety:

1. CPA-prepared fiscal year-end monetary statements for the final three years. If the bond you want is sufficiently small, internally ready year-end statements might suffice when you don’t but have a CPA. Nevertheless, you ought to be ready to have interaction a CPA on your subsequent fiscal year-end assertion and all these thereafter. Every assertion ought to embrace a work-in-process schedule (WIP).
2. Your most up-to-date internally ready monetary assertion with WIP and ageing of accounts receivable.
3. The newest private monetary statements for the homeowners of the corporate.
4. A replica of your financial institution line of credit score settlement.
5. A accomplished contractor questionnaire. This manner supplies the surety underwriter with priceless background details about your organization. Your agent will probably have one accessible so that you can fill out.

When you’ve got any questions on something concerning surety, attain out to an Previous Republic Surety department nearest you.