Before businesses can run their operations in a full-fledged manner, State Governments require them to obtain relevant licenses and bonds.
A surety bond is not meant to provide protection to the business; rather, it is obtained to ensure security to customers. In case of any default by the company, the customer is compensated. Whether you are a construction contractor or an automobile dealer, it is better to be bonded by a surety agency.
Here are the steps involved in obtaining surety bonds:
Understanding the Type of Surety Bond You Need
Understanding surety bonds and their different types can be quite confusing. It is very important that you find a surety agency that explains the whole process.
There are a wide variety of commercial and contract surety bonds. Make sure that you have understood each of them and know exactly what kind of bond will be required for your operation.
Applying for the Surety Bond
Now that you know what type of bond you need, it is time to apply for the bond. You will find a few agencies that issue bonds, but make sure you research well and choose a reliable one.
For applying, you might need to provide basic information, such as work experience, financial history, social security number, etc. This will help the surety agency check your financial credentials, including your credit score.
Getting a Quote
Next, you need to get a quote from the surety agency. The cost of a surety bond will depend on several factors, such as your credit score, financial history, etc.
Generally, the price of the bond will vary from 1 percent to 15 percent of the bond penalty.
Paying for the Surety Bond
Once you have finalized on a quote, you will have to pay a premium to the bond agency in the beginning. Your surety agency will then issue the bond.
Checking for Information on the Bond
It is very important to ensure that the information on your surety bond is absolutely accurate. Here are some pointers to look for:
- Name of your business,
- Address of your business,
- Surety bond amount,
- Relevant signatures.
In case of any discrepancies, contact your surety bond provider immediately.
Filing the Bond with Obligee
Finally, when everything is checked and verified, you need to file the bond with the obligee that required the bond in the first place. You are now bonded and ready to begin!
With a team of professional underwriters, BondPro issues bonds across 50 states in the United States. From maintenance bonds to auto dealer bonds, the agency has expertise in providing a wide variety of surety bonds.