What is a Bid Bond in Tennessee?
A bid bond is one of the types of surety bonds, which guarantees that the bidder will enter into the agreement and complete the agreement according to its terms. The bid bond provides assurance to the project owner that the bidder has the knowhow and capability to complete the job once you are selected after the bidding process. The basic reason is that you need one to get the contract. But the bigger question is why are more owners/developers requiring a bid bond in the first place? The simple answer is risk. Given the uncertainty of the marketplace, which includes long-term contractors closing their doors, to municipalities filing bankruptcy (or just slow paying), has led to owners being afraid that their contractors will be unable finish the job. So, they require a some protection.
Just fill out our bond application here and email it to [email protected] - click here to get our Tennessee 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 five (5%) or ten (10%) percent, is forfeited if you don’t accept the job).
How much does a Bid Bond Cost in Tennessee?
Swiftbonds does not charge for a surety 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 performance bond if you win the contract. The cost of a 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 TN?
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 Tennessee. 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 Tennessee?
We make it easy to get a contract bid bond. Just click here to get our Tennessee Bid Bond Application. Fill it out and then email it and the Tennessee bid specs/contract documents to [email protected] or fax to 855-433-4192.
You can also call us at 913-225-8501. We will review each application for surety bid bonds and then submit it to the surety that we believe will provide the best surety bid bond for your company. We have a high success rate in getting our clients surety bonds at the very best rates possible.
What is a Tennessee Bid Bond?
A bid bond is a bond that assures that you will accept the work if you win the contract. The bid fee (usually five or ten percent) is a damages calculation 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 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, performance and payment bonds in each of the following counties:
See our Texas Bid Bond page here.
More on Bid Bonds https://swiftbonds.com/bid-bond/.
Realistic Suggestions When Thinking Of Bid Bonds
Bid Bonds might be quite complex to understand, particularly if you don't understand how it actually works. Most individuals think of this as a type of insurance, but it's only a form of guarantee that the principal will perform their work appropriately. Although insurance providers usually offer a Surety Bid Bond, you can't really call it insurance as it has a different function. Most individuals will undoubtedly require you to obtain a Surety Bid Bond before they think about your services as it is a form of guarantee to them.
If you want to obtain a license bond, permit bond, commercial bond and more, you have to understand how they work. We will give you some information about the importance of Bid Bonds and how they work.
The Importance Of A Surety Bid Bond
Bid Bonds will almost always be necessary to protect the public because it is a type of assurance that your obligations and duties will probably be complete. You have to obtain a license Surety Bid Bond to make sure that your company will stick to the laws and you typically get a contract bond to assurance that a public project will be completed. A Surety Bid Bond is surely intended for the obliged since they are the ones that are being protected, but it will also benefit you as the clients will trust you in case you have this. There are lots of bonds today and the type of bond that you want to search for will depend upon the specific situation.
How Does It Work?
Bid Bonds are actually considered as a three-party agreement among a surety company, the principal and the obliged. The principal is actually the employer or company which will perform the work while the obliged is known as the project owner.
Construction companies will invariably be asked for by the law to buy Bid Bonds when they are taking a public project. Once the government has to do a public project, the winning contractor must secure several bonds.
The bond will guarantee that the subcontractors and the other workers will be paid even when the contractor defaults. The contractor will be accountable in addressing the losses, but as soon as they reached the limit, the duty will fall to the surety company.The contractor will handle the losses, but as soon as they actually reached the limit, the duty will obviously fall to the surety company.
The Application For A Surety Bid Bond
Bid Bonds are offered by insurance organizations, but you can search for standalone surety businesses that could specialize in these products. It won't be easy to apply for a bond as the applicant will need to experience a strict process that is very comparable to applying for a loan. The bond underwriters will still review the financial history of the applicant, their credit profile and other key factors to make certain that they deserve to be approved. It signifies that there's a chance that you will probably be denied for a Surety Bid Bond, specifically when the underwriters found something bad on the credit history.
How Much Are You Going To Spend For This?
There is no specific cost when it comes to a Surety Bid Bond as it will still depend on various reasons such as the bond type, bond amount, where the bond will be issued, contractual risk, credit history of the applicant and more. There are literally thousands of bonds available today and the cost will always depend upon the type that you will get. It won't be a problem for the amount of bond because you will get a $10,000 bond or a $25,000 bond. If your credit rating is above or near 700, you will definitely qualify for the standard bonding market and you only have to pay about 1 to 4 percent of the Surety Bid Bond amount. If you will get a $10,000 bond, it will only cost $100 to $400.
Your Application Could Be Declined
There's actually a chance that your license and permit bond request will likely be declined by the surety company as it will usually depend on the information that they can get from the background check. If the surety company thinks that it will be a risk for them to give you a Surety Bid Bond, they will deny your application. Your credit history is one of the most important factors to be approved for a surety body because in case you have a bad credit rating, it will likely be hard to get a Surety Bid Bond.
If you'll get a Surety Bid Bond even if your credit rating is bad, you'll pay an interest rate of 10 to 20 percent.
You have to know that a Surety Bid Bond is very important for businesses, specifically if they are considering a government project. Bid Bonds will surely be used for plenty of things, but they have one thing in common - they always protect the obliged.