Basic Requirements to become bonded
As someone, who is required to acquire a surety bond, you may feel frightened by the unknown as there are many different requirements that a company must meet to acquire a surety bond in the first place. Before letting your nerves get the best of you, it is pertinent to calm down and relax. The truth of the matter is that acquiring a surety bond isn’t overly complicated. However, you will need to acquire several documents, before you will be able to obtain the necessary bonds. Below, you’ll learn a little more about the application process and the documents, which will be needed.
Everything That Is Needed
It is always a good idea to compile a list of needed items, before rushing ahead. Below, you’ll find many of the documents and details, which are frequently required by a surety bond company like constructionbond.
- A completed application
- Your company’s financial details
- Personal finances and net worth statements
- Personal credit score
- Work on hand report
- Account receivables
- Proposal form may be required
Before you make contact with a surety company, it is generally a good idea to compile all of these documents. This will help to ensure that the application process will move along much quicker and that you’ll experience no delays.
The first step of applying for a surety bond will be filling out the application. It is important to note that each bond will have its own separate application and turn around time. You will need to know which type of bond and the bond amount, since this information will be needed to help determine eligibility, before completing the application. If you have any questions about surety bonds, be sure to contact an underwriter and request assistance with the application process.
Once you complete the application, you can submit it electronically or personally hand-deliver it to surety company.
The applicant will need to provide proof of their company’s financials. The balance sheet, income statement, retained earnings statement, and cash flow statement will be sufficient proof, but the underwriter will determine this. A financial analysis will be performed to determine, whether or not you have enough leverage for the surety bond.
Personal Credit Score
Your personal credit score will always be required, when attempting to purchase surety bonds. This is the case, because the surety company will utilize this figure to determine precisely how much to charge you. Instead of paying the entire bond amount, the surety will look at your credit score and use it to determine the precise percentage that you’ll be required to pay. Unfortunately, if your credit score is bad, you’ll most likely be required to pay a higher premium.
Work On Hand Report
The work on hand report, or work-in-progress schedule, is incredibly important. This document is utilized to keep track of your company’s progress on the project in question. Typically, the work on hand report will be required each and every 3 months, as well as on an annual basis. Without adequate WIP report, you may not be able to obtain the most generous surety rates possible. Therefore, it is in your interest to fill out and submit the paperwork as required.