No matter your industry, we can help simplify the bond acquisition process. Whether you’re a freight forwarder, business owner, executor or otherwise, we’ll connect directly to a leading government bonds provider.
We will discuss the various types of government bonds in the subsequent sections and answer some of your burning questions.
Who Can We Help Get Government Bonds?
Estate Executors and Administrators
You are the appointed executor of an estate of a minor, the deceased, or an incapacitated individual. In such circumstances, the courts request a surety bond be placed with a Public Guardian and Trustee or into court.
Estate managing can be convoluted, especially when you need to apply for bonds. So, enlist our help to take the pressure off your shoulders.
As a business owner in Canada, the government may require you to post a surety bond to guarantee your compliance with your industry’s license and permit requirements.
At ConstructionBond, we can help you access the bonds necessary to satisfy the government’s rules and regulations.
Customs Broker and Importers
You are importing and/or exporting goods into and outside Canada. Therefore, you’re required to post a bond with CBSA (i.e., the Canadian Border Services Agency) to guarantee you’ll pay all duties and taxes.
Our long-standing relationships with specialist customs bonds providers allow us to connect you with the best of the best in a matter of moments.
You operate a Canadian freight brokerage in the United States of America. To comply with the Federal Motor Carrier Safety Association’s (FMCSA) regulations, you must post a $75,000 BMC 84 bond, which we can help you obtain.
The Types of Government Bonds
#1 Estate Surety Bonds
Estate surety bonds are utilized when somebody manages another’s property as an appointed guardian or during the executor’s estate administration.
For legal guardians, a guardianship bond is necessary to protect the incapacitated person or minors from the mismanagement of their estate. To become a legal guardian, you have to apply to a governing body like The Office of the Children’s Lawyer or the Public Guardian and Trustee.
For executors, administration bonds protect the creditors and heirs of the estate against the incorrect distribution of assets. It acts as a legal promise that the executor will spread the assets as required under the court judgement or will. Typically, the court won’t grant the executor a probate certificate until they provide the bond.
Under the estate surety bond umbrella lies three types of bonds — guardianship, administration, and foreign executor. Since we’ve discussed the first two, let’s now discover the third and final variety’s details.
Foreign Executor Bond
Foreign executor bonds are necessary when the appointed executor lives outside the estate’s overseer’s province. Like the other estate surety bonds, it protects the beneficiaries against the mismanagement of the estate.
In this circumstance, mismanagement comes in two forms, including:
- Intentional — Taking assets for themselves when they were supposed to go to somebody else
- Incidental — Not understanding the estate procedures
To qualify for a foreign executor bond, companies take the following factors into consideration:
- Stability and character — Usually, bond companies want you to:
- be financially stable.
- have a well-established, stable career.
- be a long-term resident of the community you live in.
- Any disagreement among the beneficiaries — All the beneficiaries need to agree to you being the foreign executor. If there are any outstanding disputes, the bond company may ask for extra information before approving your bond application.
- Country of residence — There must be an agreement between the countries of residence. Therefore, if you fail to properly manage the estate and there’s a claim on the bond, the company can pursue legal action to recover their loss, regardless of country.
- Litigations — If the estate is settled poorly and in litigation, somebody could claim against the foreign executor bond. In these cases, additional information would be necessary to reassure the bond company that proceedings will run smoothly.
The majority of government bodies in Canada require businesses within their industry to obtain a license, permit, or both before operations begin. Then, as the company starts operating, it must stick to the terms and conditions within the acquired licenses and permits.
On top of the license and permits, the government entities may request you (i.e., the business owner) to post a bond, known as a license and permit surety bond. It guarantees that you’ll conduct business in line with the terms and conditions of the permit or license.
Since there are so many industries in the country, there are endless kinds of license and permit bonds you could need. But, we’ll introduce you to several sectors commonly requiring a bond to operate below:
- Auctioneers — Anybody serving or operating as an auction sales business must stick to the obligations outlined in the auctioneer’s license. Numerous governments throughout Canada require a bond to guarantee adherence.
- Bailiffs — Bonds are required for anybody acting as a bailiff to make sure they conduct business according to the laws and statutes governing the profession.
- Tobacco — As a tobacco manufacturer, you must obtain a tobacco license bond. Plus, if you’re an importer or manufacturer requiring excise stamps, you need a tobacco excise license bond too.
- Cannabis — Any licensed cannabis manufacturer, packager, produce, importer, or labeller must obtain a cannabis license bond. We can connect you with a bond company well-versed in supplying bonds to those in the cannabis industry.
- Electrical contractors — Various provincial entities and associations ensure all members post a bond to guarantee they’ll abide by the obligations stated in their license.
- Grain dealers — In specific Canadian provinces, those dealing grain must post a bond to ensure they stick to the regulations related to running this type of operation.
- Highway transportation — Highway carriers, bonded warehouses, and bond freight forwarders need various bonds. They’re required by the Canadian and US government, depending on the type of highway transportation you’re performing.
- Motor vehicle dealers — You must receive a motor vehicle dealer bond before securing your dealer’s license. They protect your customers from misrepresentation and fraud.
- Private investigators — Anybody acting as a private investigator should be licensed and bonded. It includes security consultants and security guards.
- Real estate brokers — A plethora of provincial bodies require real estate agents to acquire a broker bond. It ensures they abide by their license and often includes obligations related to managing trust funds.
- Direct sellers — If you perform door-to-door sales, you need a direct sellers bond to ensure you stick to the regulations outlined in the Direct Sellers Act.
- Travel agents — Multiple government entities require all travel agents to secure a bond. It’s a guarantee that they’ll manage customer funds according to industry regulations.
The freight broker bond or BMC-84 surety bond is required by the Federal Motor Carrier Safety Administration in the United States of America. The bond’s amount must be $75,000, and it ensures you can legally operate your freight brokerage in the US.
The bond protects your motor carriers. For instance, if you fail to pay a carrier when it’s due, they can claim against your surety bond to receive the money. Then, the bond company chases you for reimbursement.
As a customs importer, broker, or business temporarily taking goods from the country, you need to post a bond with the CBSA (Canada Border Services Agency). It guarantees payment of duties and taxes. Plus, the CBSA requires some businesses within the import/export sector to post license bonds, ensuring they adhere to the relevant regulations.
Types of customs bonds include:
- Release of goods prior to payment of duties
- Customs broker license bonds
- Non-resident GST/HST bonds
- Air carrier bonds
- Customs bonded warehouse
- Carnet bonds
#5 Corporate Bonds
As for corporate bonds, it’s a loan you make to a company when the loan is secured against certain corporate assets. In return for the loan, the issuer usually pays you interest.
Consider corporate bonds like debentures requiring collateral.
#6 Strip Bonds
The final type of government bond is a strip bond. It’s created when a bond company splits the principal of the loan and the interest payments to sell them as separate investments. The strip bond entitles you to one payment when the interest or principal amount is due for payment.
Why Should You Choose ConstructionBond?
- Ease — Consider us your magic bond and insurance wand.
- Trust — Transparency is at our core, allowing us to build trusting relationships with you and the best surety companies in the business.
- Stress-free — Obtaining the correct government bond doesn’t have to be stressful. We take all the fuss and headaches out of the equation.
Frequently Asked Questions
What Are The Most Common License and Permit Bonds in Canada?
The most common license and permit bonds request in Canada are:
- Freight broker bonds
- Cannabis license bonds
- Road cut bonds
How Much Do Government Bonds Cost?
The cost of government bonds depends on the type of bond you’re trying to acquire. Below, you can find the average prices and affecting factors for each kind:
- License and permit bonds — Usually, government entities ask for small bonds (i.e., under $50,000) to cover the industry’s obligations. Therefore, you don’t need to worry about spending thousands. Instead, you should anticipate paying between $200 and $500 per year, based on the class and size of bond needed.
- Guardianship bonds — Guardianship bonds are billed annually based on a yearly rate. The rate ranges from 0.25% to 0.5% per year. However, some bond companies give you the option to pay a one-time fee priced between 1.5% and 2.5%.
- Estate administration bonds — The cost of estate administration bonds is the rate multiplied by the bond’s value. For instance, if you have a $1 million estate and a rate of 0.75%, the bond costs you $7,500. Unlike guardianship bonds, it’s a one-time fee paid when the company issues the bond.
- Customs bonds — The cost changes depending on the type of customs bond required. For smaller bonds, you may only be looking at $375 per year. But for larger ones, you might have to pay anywhere from 0.5% to 1.5% of the bond’s value. For example, a customs surety bond value of $100,000 could cost you between $500 and $1,500.
- Freight broker (BMC 84) bonds — Your freight broker bond costs between 3% and 4% of the $75,000 required by the FMCSA. So, you should budget anywhere from $2,250 to $3,000. With that said, we might be able to negotiate lower rates if you’re a long-standing freight broker. In this case, you may only spend 1.8% (i.e., $1,350).
What Do You Need to Get Government Bonds?
Like the cost, the requirements for successfully applying for government bonds depends on the type you need, as you’ll find out below:
- License and permit bonds — You’ll need a completed license bond application form, basic information about your company, and the answers to several underwriting questions.
- Guardianship bonds — To get a guardianship bond, you need a completed bond application, your personal net worth statement, and a copy of the will.
- Estate administration bonds — If you wish to obtain an estate administration bond, you must retain an attorney and be financially stable. Having a well-established career is a definite advantage. On top of that, you will need a few documents, including the estate’s inventory, the management plan or will, bond application, and your net worth statement.
- Customs bonds — For small customs bonds, you need to supply your address, prior history of poor credit or bankruptcy, contact information, and your years in business. For larger customs bonds, you’ll probably be required to submit financial statements and your statement of account to check duties and taxes.
- Freight broker (BMC 84) bonds — To obtain a BMC 84 surety bond, you must have a completed application form, Master Carrier or Freight Forwarder number, Canadian employer ID number, tax ID number, driver’s license, and your most recent end-of-year financial statements for the company. The bond provider could ask for your personal financial statements if you’re a new business.