There is truly an abundance of construction contractors within the beautiful country of Canada. Many of these contractors have managed to gain immense wealth. If you wish to follow in their footsteps and do the same, you will need to learn all about construction bonds also referred as contract bonds. Within this comprehensive guide, you will learn about the qualification requirements and whether or not credit will matter, during this process.
Before going any further, you should realize that there are no universal requirements. The specifics vary from one bonding company to another. Some bonding companies will have a very strict procedure, which will make it much more difficult to qualify. Others will be much more lenient and will be more than willing to offer bonds to nearly any contractor, who makes contact with them. With this in mind, it is essential to consult with your surety bond provider to find out their individualistic requirements.
Most project developers or contractors will tend to deal with the same surety company throughout their work history. Once the surety becomes familiar and gains trust in the general contractor, surety bonds will be approved in a more time efficient manner. If you have a positive history of dealing with subcontractors, banks, vendors, and other project owners, you will be expeditiously approved for a surety bond.
Financial Stability required to qualify for surety bonding
The majority of surety companies will put a strong emphasis on a company’s current financial situation. If the company is nearly bankrupt, has had a surety claim, or has very little collateral, it’ll be significantly more difficult for them to qualify for construction bonds. As long as your company is in good shape and you have the statements to prove it, you shouldn’t have much difficulty meeting the required qualifications. Also, remember that your company’s credit history will be evaluated. An immaculate credit history would all, but guarantee, qualification.
In order to get approved for a bond, the general contractor should have reputability in the community. By having a positive history of fulfilling obligations and dealing fairly with previous and former project owners, you will be improving your chances of approval. A well-managed and organized run business will show the surety that you are a responsible business owner that keep promises and completes obligations in a time efficient manner.
Company And Employee Longevity
Many times, a bonding company will look carefully at the company’s employees and their longevity, before making their determination. Surety companies will give your company more credence, if your managers and foremen have been with you for an extensive period of time. However, if your company’s employment turnover is high, the surety may see your company in a negative light. If you’re able to prove that your company is capable of withstanding the test of time, the surety company will take note and will be much more likely to do business with you.
Company Capacity And Potential For Growth
Whether you’re operating a small business or one of a massive scale, you need to understand your limitations. Surety companies are incredibly intelligent and they’ll recognize right away, if you’re biting off more than you can chew. With this in mind, you need to know your company’s capacity and limitations. Do not try to take on a project, if your company cannot handle it in a reasonable manner. Also, it is wise to prove that your company has potential for growth. If you’re able to do this, the surety company will be more apt to do business with you, since they’ll know you can succeed and will be likely to return for more bonds in the future!
Most contractors with a high credit rating and reputable business history can get approved for a surety bond. To speed up the process, you need to provide the surety with all the required information in a very timely manner. The longer you delay complying with the requirements, the longer it will take to get the surety bond aka construction bond cost.
Other useful posts
- Guide to finding the perfect bonding company
- The Importance Of Your Surety Bond Claims Advocate
- Breaking down performance and payment bonds
- A comprehensive guide on how to Become bonded contractor
- Other types of bonds
- Performance bond insurance: Welcome to the big leagues
- What is a bond?
- What do construction bonds cover?
- Surety bond claims – How do surety claims work?
- What does it mean to be bonded?
- Why are construction bonds required?
- How to apply for a construction bond – A complete contractor’s guide
- How much do construction bonds cost?