Episode Description

Learn how builders and contractors can eliminate the constant hassle of individual surety bond applications by setting up a comprehensive bonding facility. This episode breaks down the strategic approach to creating a line of pre-approved bonds that can be used at your discretion for bids and contracts.

Key Topics Covered

• What is a Surety Bonding Facility
  • Creates a line of bonds available for discretionary use
  • Eliminates repetitive underwriting for each project
  • Allows for pre-approved bond capacity
• Required Documentation for Setup
  • Financial information about your company and business
  • Background on previous projects completed
  • Individual backgrounds on company principals
  • Credit worthiness and funding capacity verification
• Negotiating Facility Terms
  • Coverage amount limits and maximum bonding capacity
  • Eligible bond recipients (obligees) designation
  • Specific limits on who can be designated as obligees
• Strategic Planning Steps
  • Identify future bond needs (construction, bid, performance, financial bonds)
  • Verify bonding company issues required bond types
  • Ensure long-term capacity and appetite from surety provider
  • Maintain up-to-date financial documents (P&Ls, balance sheets)
• Underwriting Considerations
  • Initial facility setup requires one-time underwriting event
  • Periodic updates may be required for capacity expansion
  • Credit score, net worth, and asset-to-liability ratios evaluated
  • Prior claims history impact on approval
• Growth Factors That Help
  • Company expansion with additional employees
  • Increased business footprint
  • Improved financial performance over time
  • Clean performance record on previous contracts
• Benefits of Bonding Facilities
  • Faster response time to contract opportunities
  • Pre-approved bond capacity for immediate use
  • Reduced waiting time for contract validation
  • Self-issued surety bonds capability

Resources Mentioned

• Contact information for surety bond facility setup
• One-on-one consultation services available
• Licensed professional advisory services