As a business looking to operate in the United States, you might be required to acquire surety bonds for licenses.
The costs of surety bonds can be a serious concern for you. We at BondPro provide a brief guide in determining the costs of your surety bonds and some other relevant concerns:
Some Factors Determining Surety Bond Costs
Typically, cost of surety bonds involves an upfront premium and subsequent annual payments. The price of the surety bond might range from 1 percent to 15 percent. Here are some determining factors:
Standard Market Cost
You come under the standard applicant category if your FICO score is 650 or above. This is because credit score is a measure of the entity’s reliability. With a higher credit score, the surety agency is assuming a lower risk, and hence lower prices.
An even better credit score might mean a price of as low as 0.75 percent of the total bond amount.
In case of bad credit score, the price of surety bond can rise as high as 15%. Tax liens, bankruptcies and unfavorable civil judgments are some indicators of bad credit.
If the situation is worse, a surety bond agency might even refuse to issue the surety bond.
Another factor determining the price of surety bond is financial strength. If you can show strong personal and financial statements and liquid assets, the prices might go down.
Experience in the Industry
This one’s pretty obvious. The more time you have spent successfully completing projects, the more reliable you are. It is a good idea to attach evidence of industry experience with the surety bond application.
Crucial Considerations besides Costs
You might also have other considerations besides costs regarding surety bonds. Let’s take a look at some of them:
Risk of Losing Personal and Business Assets
Getting the surety bond is not an achievement, fulfilling its legislations is. Your failure to meet these guidelines might mean that your personal and business assets will be used to pay back the project owner or your client.
Obtain a surety bond is a complex process that involves a lot of paperwork. Make sure that the surety agency you are working with can quickly issue bonds. This becomes all the more important if the surety bond is a license requirement or if you have to place a contract bid.
With a team of profession underwriters, we at BondPro help companies obtain surety bonds. From quick turnaround times to decreased prices, our online bond agency ensures that you get the best deal. Visit our website for relevant applications and forms and get started with the process!