Updated: Oct 15
If you're planning a project in 2023, whether it's a construction endeavor, a manufacturing venture, or any other contractual obligation, securing a performance bond is a crucial step. Performance bonds provide financial assurance that a contractor will fulfill their contractual obligations. This comprehensive guide, brought to you by Shorewest Surety Services, will walk you through the process of obtaining a performance bond, ensuring you're well-prepared for your project.
Step 1 - Gather the Necessary Documents
To initiate the process of obtaining a performance bond, it's essential to have the requisite documents at your disposal. Here's a breakdown of what you need:
1. Identify the Type of Performance Bond You Require
The first step is to identify the specific nature of your performance bond. Is it for a construction project, a manufacturing contract, or a different type of project? You'll need to provide details about the contract's value and the project specifics.
2. Prepare Your Personal and Business Financial Documents
Much like applying for a line of credit, your credit score plays a significant role in determining the premium you'll pay for the bond. If your credit score isn't perfect, worry not; alternative options are available. An experienced surety agency, such as Shorewest Surety, can guide you to the best solution.
In addition to your credit score, the surety agency will assess your recent personal and business financial statements to evaluate your creditworthiness.
Step 2: Find a Reputable Surety Agency
It's essential to distinguish between a surety company and a surety agency, as this can significantly impact your experience. Here's the difference:
A surety company directly underwrites the bond and promptly compensates the obligee in case of claims, with the contractor repaying the surety.
A surety agency acts as an intermediary that works on your behalf to secure the best bonding program from a surety company. A licensed surety agent possesses in-depth knowledge of surety bonding and can help you make informed decisions that save you time and money.
When choosing a surety agency, consider the following qualities:
Specialization in construction contracting.
Offering a hassle-free, upfront, and free quote.
Providing personalized service from day one, with a dedicated agent for your queries.
Positive reviews or testimonials from other clients, indicating their trustworthiness.
Step 3 - Get a Quote
After you've selected a reputable surety agency, contact them to obtain a quote. While online quotes can be useful, it's recommended to speak with a licensed agent on the phone. This allows you to receive tailored solutions and immediate answers to your questions.
To receive an accurate quote, the surety agent will inquire about your work type, the scale of your completed projects, and request copies of your recent personal and business financials. They'll then consult with various surety companies to find the optimal bonding program that suits your needs with the lowest premiums.
Step 4 - Sign the General Indemnity Agreement
Once you've found the right bonding program, it's time to sign the General Indemnity Agreement (GIA). This legal document holds you, as the contractor, and your assets responsible for any claims against the bond. The surety company guarantees prompt payment of claims, but you must reimburse the surety.
Step 5 - Request a Performance Bond
With the GIA in place, you're now ready to request the performance bond you need from your surety agent. They'll ensure everything is prepared for your signature.
Acquiring a performance bond is a straightforward process. A reliable surety agency will seamlessly guide you through the process while finding the most suitable bonding program for your business.
If you're interested in obtaining a performance bond quote today, the team at Shorewest Surety is here to help. For over 20 years, we've been exclusively dedicated to assisting construction contractors in securing the best rates, expertise, and service. We genuinely care about your success and are eager to share our bonding expertise. Give us a call today at (800) 264-1634 to speak with an agent who will provide you with a personalized quote.