We just facilitated a surety bonding transaction for one of our clients. The client is a maintenance company that required bonding for a large contract. The contract was for a total of 9 million dollars over a 5 year period. Unfortunately, the incumbent bonding agent could not get it done in a timely manner. Through our network of specialists; we were able to assist in securing the bond within a 24 hour period. Timing was crucial here as the client would have lost the contract otherwise. These types of bonds can be difficult to obtain in such a short period. Understanding how and where to get a surety bond can be very important when time is of the essence. Below is more information on Surety bonding.
What is a Surety Bond?
A risk management tool used by developers and project owners in the construction field; bonds provide a legal guarantee in terms of contractor performance and project completion. The three main types of bonds used in this industry are bid bonds, performance bonds and payment bonds. Issues during the bidding process, bid bonds constitute an assurance that a company will sign a contract for the specified amount if they are a low bidder. Performance bonds provide compensation to the owners in the case of failure of project completion or project not meeting set standards. In this case the bond ensures that no money will be lost in the process of completing the projecting through another party. Lastly, payment bonds provide a surety that all subcontractors and suppliers will be paid for work completed.
Bonds reassure project owners that the company in question is qualified and financially capable of undertaking such a large project which poses a great financial risk. The construction company will then be thoroughly inspected before a bond is issued. Furthermore, projects that are bonded are usually completed without complications due to the legal and financial penalties involved.