Don’t get stuck on surety bonds

One option for contractors searching for work is governmental jobs that typically require surety bonds. And all federal construction projects that exceed $100,000 require bonds.

Danger“Bonds are a form of guarantee that the job will be completed,” says Robert Berman, CEO and co-founder of Ox Bonding. “It’s a difficult process. It’s no different than a small business going into a bank trying to get a credit line.”

He encourages contractors to maintain adequate working capital, a good credit score and a list of positive references. “If someone has a problem getting bonded, it’s usually because of poor credit, references and financial statements.” To prepare for the bonding process, he says they need to organize all of their records and understand their business. Contractors should also show the surety provider information on their largest project. Enrolling in a surety program before a bond is needed is a good way to shorten the process when one is needed.

“Without the bonding, you don’t get the work.”

General contractor Joe Bucci, of Bucci Associates in Glen Rock, New Jersey, learned this the hard way after an insurance company declined to bond his firm. “Without the bonding, you don’t get the work,” he says. He suggests going to a surety specialist, instead of an insurance provider.

Being bondable sets contractors apart and means they have someone who’s willing to stand behind them, says Susan Reich, vice president of Florida Surety Bonds. “It shows someone impartial has taken a look at a contractor’s performance, credit, financial statements and working capital and recommends them for a specific project,” Reich says.

Equipment can also affect a contractor’s chances at getting bonded. “Some contractors just financed too much equipment,” Reich says, “and they haven’t had enough work to pay for the machines.” She says it is a balancing act between buying the equipment they need and having enough liquidity to pay their bills.

“The key thing for small contractors is to pay their personal bills promptly,” says Reich’s husband Jeff, president of Florida Surety Bonds and member at large of the National Association of Surety Bond Producers. “They need to make sure their personal credit score is good.”

Partner Insights
Information to advance your business from industry suppliers

Definition:

A surety bond is a contract between a contractor, their client (mainly government or public money projects) and the surety provider to ensure the contractor performs the work on time and according to the agreement.

What’s involved:

General application, financial statements, contractor’s resume, credit scores, bond form

Benefits:

Meet requirements for public sector and avoid penalties and fines

Challenges:

Credit score and financial statement approval

Tips:

Get organized, think about business, give good references, improve credit, talk to a bonding specialist

 

 

BRIEFS

JLG recognized in Popular Science

Popular Science magazine has selected JLG Industries’ 1500SJ boom lift for its Best of What’s New 2011 list. One of 100 concepts recognized, the boom lift was featured in the engineering category. The 1500SJ is the first straight boom lift that can take workers up to 150 feet, while requiring only a weight permit for transport.

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The Road Connection, a yearlong nationwide initiative that showcases the importance of quality roads throughout North America, is designed to bring attention to the need for a new Road App Untitled 1transportation bill. The tour’s truck stops at trade shows, industry events and KPI-JCI and Astec Mobile Screens distributors, spreading the word through social media. For more information or to find out when the truck will be near you, visit theroadconnection.org. Scan the tag below with your smartphone to see a video on road needs.

 

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Exodus Machines in Cat lineup

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Manitou, Yanmar form strategic alliance

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