Knowing what documentation is required to apply for a construction surety bonds is an important step toward a company becoming bonded.
But it's not the first - and likely not the most important - step in the process. All of the documentation will mean little if your company doesn't have the right attributes and experience to document. First and foremost, make sure your financial house is in order. You need to provide adequate collateral and to show that you have proper funds control.
A well-qualified applicant for construction surety bonds also will have built a sound financial statement, with low debt levels (proportional to their market) and good cash reserves. Remember: A credit check will be performed, so it's critical to clear up any debt and credit issues that could appear in your credit report.
Depending on the project size, you'll be required to provide one of three types of financial reports: a compilation prepared by your CPA for projects under $1 million; a reviewed statement from your CPA for projects over $1 million; or a full audit conducted by a CPA for very large projects.
Another requirement to apply for construction surety bonds is a strong list of references. The list should include more than just former customers. Suppliers and other industry members can highlight characteristics of your company that are important to bonding agencies.
Throughout the process, make sure to work with a surety professional who can explain the requirements to you and help ensure you put your best foot forward in the application process.
Getting your ducks in a row ahead of time has an additional benefit beyond increasing your chances of receiving a construction surety bond. A strong financial statement, good collateral and the right list of references can also help you get the bonds you need at the best rate available, which is one more step in the right direction for your company's bottom line.
Click here for more information on the paperwork required for surety bond applications. You can also click here to learn more about construction surety bonds and other contract surety instruments.
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Mark Levinson joined Brunswick Companies in 1998 and is responsible for managing Brunswick's growing surety bonding department. Mark specializes in surety bonds of all sizes and types for all types of industry. Mark is regularly a speaker at numerous types of events in regards to topics related to the bonding industry. |