Do you need to get a surety bond?
If you’re starting a new business or working for an existing one and you still haven’t taken the time to secure a surety bond, you’ve unfortunately put your company at risk.
A surety bond can help protect your business from any financial or performance obligation issues that may arise. It will save you from compensation with monetary damages.
To qualify for surety bonds, read our guide below.
Assessment of Personal Credit History
A personal credit assessment is one of the essential qualifications for a surety bond. Make sure you have a solid understanding of your personal credit history.
This includes pulling credit reports from all three major credit bureaus: Experian, TransUnion, and Equifax. Take measures to improve your credit if necessary.
This may include paying off outstanding debts, disputing inaccuracies in your credit report, or developing a positive payment history. Be prepared to provide information about your personal credit history, financial stability, and business plans.
Assessing Business Financials
In order to qualify for a surety bond, businesses must first assess their financials. This includes creating a balance sheet, income, and cash flow statement.
These documents provide a snapshot of the company’s current financial status and give underwriters an idea of its ability to repay its obligations. And to get the best rates, businesses should have a solid financial foundation and a good credit score.
Determining the Surety Bond Amount
The amount of the bond is determined by the court or the contracting party and is based on the value of the contract, the projected revenue from the project, and the principal’s financial strength.
The surety company will also consider the principal’s experience in similar projects and the strength of the project’s management team.
Make sure you understand the terms and conditions of the bond and that you can afford the premium. Then, complete an application and submit it to https://suretybonds.co/.
You must then complete an application, which will include a credit check. If deemed a high-risk applicant, you may be required to provide collateral.
You need to have a strong understanding of the underwriting process. The underwriting process determines whether or not you qualify for a surety bond.
During this process, the surety company will look closely at your financials, business plan, and personal credit score. They will also assess the risks involved in your business and decide whether they will provide you with a bond.
If you can do all these things, you should have no problem qualifying for a surety bond. Remember to be honest and transparent with the surety company during the underwriting process, and you should be fine.
Getting Approved for Surety Bond
Applying for a surety bond is not as difficult as it may seem. However, there are a few surety bond requirements that you must meet to qualify.
If you meet the qualifications, talk to a professional about getting a surety bond. With the right knowledge and preparation, any business owner can become approved for a surety bond.
Are you interested in learning more? Take a look at our blog for more helpful guides and tips.