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Tips for small contractors who need to post a surety bond

Swiftbonds is the industry leading experts in all forms of construction bonds. Call us today Tips and Tricks for small contractors who need to post a surety bond Starting a small contractorship company involves so many administrative and business details to take care of that it can get disheartening. One of the common requirements that contractors need to meet is to post a surety bond as a part of their licensing process. When bidding on construction projects, they might also have to obtain other types of contractor surety bonds. This licensing or bidding criterion can seem a serious hurdle, but is not as complex or costly as you may think. It is necessary to become acquainted with the way bonds work, so that you can make them work for your business. For contractors’ clients, a surety bond can be a strong sign that the contractorship company is safe to work with and can be trusted. There are several important tips that small contractors should keep in mind. 1. Understand how bonds function Before starting a bonding application, it’s crucial to differentiate between surety bonds and insurance. Unlike the latter, bonds are not protecting your business. They are a tool that provides extra security for your clients. A surety bond is, in practice, a contract between your business, the authority that requires the bonding and the surety underwriter. The bond provider takes on the responsibility to back your company in front of relevant state or local bodies. Depending on the exact type and amount of the bond, they offer compensation to affected parties in case you do not abide by state rules, contracts or the statutes set in the bond language. That’s why it’s important to avoid claims and make sure projects are completed on time and in high quality. 2. Differentiate between contractor license bonds and contract bonds Contractors are required to post different types of bonds in various situations. It’s worth getting acquainted with those cases in advance. When getting a contractor license, you are likely to be required to post a contractor license bond. It is an indispensable criterion for obtaining your license and being able to operate legally in your state. Its purpose is to provide extra security for the state and your clients that you will follow all applicable laws. Additionally, if you would like to participate in public or private projects, you will have to obtain construction contractor bonds. They are a different set of bonds that are project-specific and not related to your license. The most common contractor bonds include bid bonds, payment bonds and performance bonds. They are needed at the consecutive stages of the project bidding process. Their goal is to protect project owners from non-completion of the project, as well as subcontractors and suppliers from non-payment of materials and work. 3. Learn how you can decrease your bond costs One of the biggest concerns of contractors is the price they need to pay to get bonded. Understanding how your surety […]

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