Construction Bond Line
A construction bond line is typically the total dollar limit that you have available for bonding with your individual company. This is sometimes called your bonding capacity. When you set up your account with your bonding company (surety) you’re usually given two different numbers for your construction bond lines. These two numbers are your single limit as well as the aggregate limit. The single limit in construction bond lines represents the total maximum bid that you can use with a single contract whereas the aggregate limit is the maximum total dollar value of bonds that you can have available for all of your construction work at one time.
When you first receive your construction bond line, it is usually represented by just two numbers. You might get something along the lines of 250,000 over 500,000 for a line. Basically what this means is that at any one time you can have construction security bonds out on two projects of $250,000 in value for your company. You can think of the aggregate line as a total credit limit for the amount of bonds that your company can have out whereas the single limit is more of a transaction limit for the total value of a single bond. Essentially these limits act based off of the value of your company to help protect your construction company and you as a contractor while ensuring you can still take out security bonds on any project that you complete.
There is no absolute guarantee that you will be approved for security bonds based off of your bond lines. These lines are simply placed as a guide for the maximum amount that you should be considering in any security bonds application. Make sure that you keep within your bond line limits or you could run into problems with your bond agency.
If you are extremely limited in your bond lines, a good surety agency will be able to tell you how you can increase your bond line limits (so that you can take on more projects). You can also reduce the total amount of surety bonds that you have out with the help of your surety bond agency. Agents can remove items from your work, which can help to free up more money with your aggregate bond line. It will take some negotiation as well as some help from your surety bond agency but you can make construction bond lines work for your company and understand them when you are approaching surety bond agencies.