What is a Bid Bond in Louisiana?
A bid bond is one of the types of surety bonds, which guarantees that the bidder will enter into the agreement and complete it according to its terms. It provides assurance to the project owner that the bidder has the knowhow and wherewithal to finish the job once you are selected after the bidding process. The basic reason is that you need one to get the work. But the larger question is why are more owners/developers requiring a surety bid bond? The basic answer is risk. Given the uncertainty of the marketplace, which includes experienced contractors going out of business, to municipalities filing bankruptcy (or just slow paying), has led to owners being afraid that their contractors will be unable complete the work. Thus, they require a some protection.
Just fill out our bond application here and email it to [email protected] - click here to get our Louisiana Bid Bond Application
A bid bond is issued as part of a bid by a surety bond company to the project owner. The owner is then assures that the winning bidder will take on the contract under the terms at which they bid.
Most bid bonds contain a bid percentage (usually 5% or 10%, is forfeited if you don’t accept the job).
How much does a Bid Bond Cost in Louisiana?
Swiftbonds does not charge for a bid bond (with two exceptions, see below). The reason that we don't charge for a bid bond is that we will charge for the P&P bond if you win the contract. The cost of a surety performance bond can vary widely depending on the amount of coverage that is required (see below).
Two exceptions for bid bond charges:
1) We do charge for Overnight fees
2) We will charge you if there is NOT going to be a performance bond.
How much do bonds cost in LA?
Bond prices fluctuate based on the job size (that is, it's based on the cost of the underlying contract). The cost of a bond is estimated through a couple of back-of-the-envelope calculations. In general, the cost is approximately three percent (3%) for jobs under $800,000 and then the percentage is lower as the contract amount increases. We work diligently to find the lowest premiums possible in the state of Louisiana. Please call us today at (913) 225-8501. We'll find you the very best rate possible for your maintenance bond or completion bond. Things that can affect this pricing are the perceived risk of the job, the financial position of the entity being bonded, plus other factors.
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These rates are for Merit clients, Standard rates are higher
How do I get a Bid Bond in Louisiana?
We make it easy to get a contract bid bond. Just click here to get our Louisiana Bid Bond Application. Fill it out and then email it and the Louisiana bid specs/contract documents to [email protected] or fax to 855-433-4192.
You can also call us at 913-225-8501. We thoroughly review each and every application for bid and performance bonds and then submit it to the surety that we believe will provide the best bid bond for your company. We have a great success rate in getting our clients surety bid bonds at the best rates possible.
What is a Louisiana Bid Bond?
A bid bond is a bond that guarantees that you will accept the work if you win the contract. The bid fee (usually five or ten percent) is a forfeiture that is paid when you win the bid, but then refuse the work.
Find a Bid Bond near Me
Typically, a bid bond and payment and performance bond are done together in the same contract by the surety. This way, the owner of the project is assured that the project can be completed pursuant to the terms of the contract and that it will not be liened by any contractor. This is performance security for the owner of the project.
Who Gets the Bond?
The general contractor is the entity that gets the bond. It is for the benefit of the owner (or in the case of government contract work, the governmental entity). However, it's the general contractor that has to apply for the bond and be underwritten before the performance and payment bond is written by the surety. This is also known as bonding a business.
We provide bid bonds in each of the following counties:
East Baton Rouge
St. John The Baptist
West Baton Rouge
See our Maine Bid Bond page here.
More on Bid Bonds https://swiftbonds.com/bid-bond/.
An Analysis Of The Strategies When Thinking Of Bid Bonds
Bid Bonds are very complex to understand, specifically if you don't know how it really works. Most folks consider this as insurance, but it's actually a form of guarantee that the principal will perform their work appropriately for the obliged. Insurance providers can provide a Surety Bid Bond, but this is not insurance because its function is very different. Most folks would expect you to obtain a Surety Bid Bond before they consider your services as it is a type of guarantee to them.
If you would like to get a license bond, permit bond, commercial bond and more, you have to know how they really work. We will give you info on the significance of Bid Bonds and how they actually work.
A Simple Explanation On A Surety Bid Bond
Bid Bonds will likely be required by the public as it can secure them and it can also guarantee that the principal will fulfill their duties. You are the principal so you have to get a license Surety Bid Bond to guarantee that your company will usually stick to the laws and you should get a contract bond to guarantee that a public construction project will likely be completed. These are some examples that would offer you an idea about a Surety Bid Bond.
This is actually made for the customers since they will be protected by the bond, but it can provide advantages to you as well because they would trust you if you have this.
How Does It Work?
Bid Bonds are actually regarded as a three-party agreement among a surety company, the principal and the obliged. The principal is actually the employer or company which will carry out the work while the obliged is known as the project owner.
Construction businesses will invariably be asked for by the law to purchase Bid Bonds when they're going for a public project. If the government has to finish a public project, the winning contractor should secure several bonds.
The bond will guarantee that the sub-contractors and other workers will be paid even when the contractor defaults. The contractor will be responsible in addressing the losses, but as soon as they reached the limit, the duty will fall to the surety company.The contractor will cover the losses, but as soon as they actually reached the limit, the duty will really fall to the surety company.
The Application For A Surety Bid Bond
Bid Bonds are actually offered by insurance businesses, but you may always look for standalone surety businesses that will specialize in these products. It will not be simple to apply for a bond since the applicant will need to experience a strict procedure that is comparable to applying for a loan. The bond underwriters will assess the financial history of the applicant, their credit profile and other key factors to be sure that they deserve to be approved. It also signifies that there is a chance that you will be denied for a Surety Bid Bond, specifically when the underwriters found something negative on the credit history.
How Much Are You Going To Spend?
There isn't any fixed cost for a Surety Bid Bond since it depends upon various reasons like bond type, bond amount, where the bond will likely be issued, contractual risk, the credit rating of the applicant and a lot more.
There are plenty of bonds right now and the cost will depend upon the type of bond that you could actually obtain. The amount of the bond may also be an issue because you could get a $10,000 bond or a $25,000 bond.
In case you have a credit history of above or near 700, you will be eligible for the standard bonding market and you will only pay a premium that is 1 to 4 percent of the Surety Bid Bond amount. If you can get a $10,000 bond, it will cost you around $100 to $400.
Is There A Possibility To Be Rejected?
There's a chance that your license and permit bond request will actually be rejected by the insurance companies and it will usually depend upon their background check. If they actually feel that giving you a bond will be a big risk, they will not release a Surety Bid Bond for you.
Credit history may also be a factor because in case you have a bad credit score, it will be difficult for you to obtain a Surety Bid Bond since the companies think that you are a risk. In case you have a bad credit rating and you were approved for the bond, you usually need to pay an interest rate of 10 to 20 percent.
There's a possibility that your application will likely be refused so you should look into the requirements before applying.
If you are going to obtain your Surety Bid Bond, make sure that you understand the whole process so you won't make a mistake. It won't be easy to apply, but if your requirements are complete and you are eligible, you can obtain a Surety Bid Bond.