{"id":2497,"date":"2017-05-21T00:54:41","date_gmt":"2017-05-21T00:54:41","guid":{"rendered":"http:\/\/suretyone.com\/blog\/?p=2497"},"modified":"2017-05-26T04:34:22","modified_gmt":"2017-05-26T04:34:22","slug":"contract-surety-bond-approvals-1","status":"publish","type":"post","link":"https:\/\/suretyone.com\/blog\/contract-surety-bond-approvals-1\/","title":{"rendered":"Contract Surety Bond Approvals ~ How to Get Your Performance Bond Approved"},"content":{"rendered":"

Contract surety bond approvals should be easier. One of the most frustrating parts of being a contract surety bond underwriter is having to decline bonding capacity to a contractor that you feel possesses the prerequisite experience, expertise, character and financial stability to accomplish his or her project. It has been my experience that disapproval of otherwise well qualified applicants are due to one of three reasons.<\/p>\n

Realistic lead time<\/strong>
\nIt is unreasonable for a contractor that has not previously qualified for program bonding capacity to submit a request the day before a bid bond<\/a> or final bond is due. The underwriter must be afforded ample time to digest the biographical information provided by the contractor, read and understand the contract and therefore the nature of the bonded obligation, retrieve and review credit and financial rating service feedback, and properly analyze the contractor\u2019s financial statements paired with work on hand (work in progress) schedules. During this review process concerns may arise that require clarification through telephone calls and\/or emails to the contractor and the project owner. Very small contract surety requests don\u2019t require the same effort as larger ones. Nonetheless the same underwriting fundamentals apply to contract surety bond approvals regardless of the project size.<\/p>\n

Inappropriate financial presentation<\/strong>
\nIn efforts to offer bonding<\/a> to small and emerging contractors most sureties have created \u201cquick bond\u201d or \u201cfast app\u201d programs. It is understood that new and small contractors are unlikely to have CPA prepared financial statements. The cost of formal financial reporting can be difficult to budget for. As project values increase, underwriters must be able to trust the accuracy of the working capital, revenue, efficiency and billing figures contained in a financial statement. Presentations prepared to review or audit standards are absolute prerequisites for larger bond requests. Offering formal statements also provides the underwriter with an indication of a contractor\u2019s financial management maturity and understanding of the basic principles of credit application. As a general rule, \u201cIf you want to play in the big boy pool, you have to be willing to play by big boy rules.\u201d A contractor\u2019s unwillingness to quickly provide the requested financial information prepared to the appropriate standard is a big \u201cred flag\u201d.<\/p>\n

Overextension<\/strong>
\nAs part of an application review the surety underwriter necessarily compares the size and complexity of the proposed project with projects that the contractor has successfully accomplished in the past. Bidding on jobs that are significantly larger in scope, complexity or outside of the contractor\u2019s primary work specialty are leading causes of surety request declinations. Often coupled with a proposed project location distant from the contractor\u2019s normal geographic center of operations, overextension is a serious concern.<\/p>\n

All three of the aforementioned factors are unconditionally within the contractor\u2019s control. Understanding how these components affect an underwriter\u2019s overall opinion of a contractor\u2019s bondability and taking the appropriate actions to provide for them is key. Clear, open lines of communication with the bond underwriter are essential in answering each one of them. Put into practice, more contractors will obtain contract surety bond approvals and the surety support that they require.<\/p>\n

SuretyOne.com<\/a> (Surety One, Inc.) is a bond underwriter, international insurance brokerage and surety-focused managing general agency licensed in all fifty states, Puerto Rico, U.S. Virgin Islands, Canada and Dominican Republic. Surety One, Inc. specializes in surety bonds<\/strong><\/em> (commercial and contract), fidelity bonds, and pure financial guarantee. Unique among surety underwriters, Surety One, Inc. enjoys very broad binding\/issuing authorities through multiple admitted and non-admitted carriers.\u00a0Visit www.PerformanceBond.com<\/a>, call (800) 373-2804, or email Underwriting@SuretyOne.com for a performance bond<\/strong><\/em> application package or information about any surety bonding need. Recu\u00e9rde que le asesoramos en SU idioma, as\u00ed que comun\u00edquese con nosotros, SU compa\u00f1\u00eda afianzadora preferida para la fianza.<\/p>\n

~ Constantin Poindexter<\/a><\/p>\n

#suretybond #suretybonds #performancebond #performancebonds #bidbond #bidbonds #SuretyOne<\/p>\n","protected":false},"excerpt":{"rendered":"

Contract surety bond approvals should be easier. One of the most frustrating parts of being a contract surety bond underwriter is having to decline bonding capacity to a contractor that you feel possesses the prerequisite experience, expertise, character and financial… Continue Reading →<\/a><\/p>\n","protected":false},"author":1,"featured_media":2498,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[328],"tags":[26,27,1674,1589,1879,1574,1677,2066,1734,1871,51,2175],"yoast_head":"\nContract Surety Bond Approvals<\/title>\n<meta name=\"description\" content=\"Contract surety bond approvals should be easier. 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