The Lowest Construction Bond Rate
It’s a question that we are asked pretty consistently: How do we get the lowest construction bond rate possible? Well, construction bond rates can vary – the rate depends on the type of bond, as well as the bond agency that you end up using.
There are a number of ways that you can work to receive lower construction bond rates. By following these tips you can work to drive down the cost of your surety bonds. That way, you can make sure that you put more money back into your business or into the construction process (to deliver a higher quality result), as well as have less stress about your business finances.
Here is our most popular advice on ways for you to find the cheapest rates on construction bonds (outside of our top-ten that we posted):
Compare Bonds Among Companies
Compare bonds through multiple surety bond companies: certain agencies will be able to offer bonds from many different potential sources. Your bond agent should be choosing from multiple sources, which will allow you to drive the price of your bonds down because you will have more options to pick from. Long-established agencies generally have access to different types of surety bonds, or access to different underwriting criteria, so it’s important to shop around and pick an agency that has more options available to you.
Compare Different Types of Bonds
Don’t just consider a single type of surety bond. Some bonds are based on credit rating while others are based on tangible net worth. Go ahead and consider an agency that won’t look into your credit rating: some surety bonds require you to put up your own personal credit rating as well as the finances of your business. Going into a surety bond agency that doesn’t require any of your credit rating, especially if you have a poor credit history, is important to reducing the cost of your construction bond rates.
But be forewarned: if you have failed to deliver several construction projects or your business is experiencing some financial difficulty, there can be real problems when it comes to receiving a fair deal on construction bond rates.
Cheaper Can be Better
Look at projects that require cheaper bonds: certain construction projects don’t require the use of performance bonds or other fully-insured bonds. If you can find a construction project that only requires the use of the bid bond you can work to save money off of the total cost of your construction bond process.
The less amount that you have to tie up with financial institutions, and the less people that you have to involve with your construction bond, generally means the less cost to you in the end. Pick your construction projects wisely and you can lower the cost of construction bond rates for your company.
By using these tactics you can find the lowest construction bond rates.