A Surprisingly Complex Question
As someone, who is faced with the requirement of obtaining a bid bond for contractors, you’ll want to work quickly! If you’re unable to obtain the bid in time, the bidding window will close and a potentially unqualified company could sweep the job right from underneath your nose. With this in mind, it is truly in your best interest to work through the bid bond qualification and application process as rapidly as possible. However, you’re not the only entity involved in the equation. The surety will also need to process your application quickly. How long does this normally take? Continue reading to find out.
When it comes down to it, the question is truly much more complex than you might imagine. Unfortunately, there is no uniform answer and there are multiple variables, which will play a role in the overall duration it takes to get your bond. First and foremost, your surety of choice will be very impactful. Some work with insurance and surety. This can cause somewhat of a conflict of interest and may lead to delays. The size of the project you’re bidding on will also be impactful. Bigger bids require bigger bid bonds, so you should expect to wait a bit longer.
Some of these factors will be explored in greater detail below.
Your Surety Company
As mentioned above, your surety company of choice will prove to be very influential on the overall turnaround time. Some sureties are capable of getting things done much quicker than others. However, you should not associate speed with quality, as this isn’t necessarily true. Some providers will take a little bit longer, due to a more extensive qualification process. Some will require contractors to submit additional documentation and they’ll need extra time to analyze all of this information.
Required Bond Amount
Another thing to take into account is the needed bond amount. If the amount is minute, a smaller risk will be involved. However, if the amount is enormous, the surety will be required to take a bigger risk on you and your company. If your situation aligns with the latter scenario, you can expect longer wait times. The surety company will need to put in additional research to make sure that your company will follow through and satisfy all parties involved. Remember to be patient and always provide the necessary documentation and information ahead of time to prevent delays.
It is also essential to remember that bid bonds are a little trickier than other types of bonds. To the surety provider, they’re considered to be a little riskier than other types of bonds, so the contractor will need to proceed through a lengthy prequalification process first. Although each surety will have a unique prequalification procedure, this will extend the turnaround time to some degree. Remember that you’ll need to submit an array of documents to get qualified and it is in your best interest to submit everything upfront. Below, you’ll find a list of items that will be needed.
- Organization chart, which displays key employees and all of their current responsibilities
- Financial statements from owners and the company itself
- Work history, as well as details regarding current work in progress
- Completion plan or continuity
- Proof of your company’s line of credit
- Letters of recommendation from owners, subcontractors and others you’ve worked with in the past
- Resumes from all key employees of the company
If your company has been in business for at least a year or longer, the surety company will demand to see your company’s fiscal year statements. Most will ask for at least three years of documentation. Within this documentation, you will need to provide a balance sheet, income statement, cash flow statement, management letter, and an opinion page from an accountant. Depending on the current date at the time of your request, you may also need to submit interim financial statements to display how your company is doing for the current year.
The surety provider will analyze all of this information to get a better understanding of your company and its current status. If they feel you’re in good shape, you’ll approve you and provide you with an application.
Application And Quote
Once all is said and done, you’ll need to go ahead and submit your application. Depending on your provider of choice, you may be able to do this online. Otherwise, you’ll need to submit the application in person or through the mail. Regardless, after the application has been submitted, the surety provider will examine it carefully, as well as the aforementioned information. Within a matter of hours, they’ll provide you with a price estimation. At this point, it is up to you whether or not to accept the figure.
If you do, you can sign the agreement, pay the fee and get your bond. However, you may decide to shop around a little more. Doing so can be wise, but it’ll also drag out the process a little bit longer.
Getting the bid bond needed could be much quicker than you might imagine. The key is finding a responsive and responsible surety provider. The good news is that you’ve come to the right place. The majority of our clients are capable of qualifying, submitting the application, accepting the quote, and acquiring their bond within a matter of hours. If you’re in a hurry, you should begin working on your application right now, so you can avoid further delays.