There are a lot of risks involved when you’re setting up a new company—the product or service might not be well-received; your loans might outgrow your income stream; you might lose suppliers, or worse, fail to meet customers’ expectations.
Surety bonds provide your business an extra layer of security by ensuring your customer that they will be protected against financial losses. If you’re setting up a startup, know how to mitigate the risk involved in your business operations with surety bond.
What do surety bonds do?
It’s a promise between three parties to ensure satisfactory service or a product is received in return of payment. The surety company pays on behalf of the business, if it fails to meet the obligations outlined in the contract.
3 parties involved in this entire process include:
- The principle, a business or entity that is under an obligation to perform a certain task
- The obligee, the party who requires a guarantee that the principal will follow through with the contract
- The surety, the party that provides the guarantee
Why Do You Need It?
In order to start a business in a specific industry, the law requires you to get a license or a permit bond, e.g. notary bond, contractor license bond, private investigator bond, broker bond, or motor vehicle dealer bond, etc.
To protect your small business against employee fraud, theft or embezzlement, choose a fidelity bond. These bonds protect your business from incurring a loss, in cases an employee is responsible for embezzlement or theft.
Business service bond
In order to protect your valued customer from becoming a victim of employee fraud, invest in a business service bond.
For example, if you run a cleaning company, and one of your staff member steals a necklace from a client’s home. Your client’s claim will be reimbursed with your business service bond. Investing in these bonds offer a sense of security and trust to customers. This contributes to the long-term success of your business.
This bond is job-specific and covers the performance deliverables mentioned in the contract—for example, meeting a deadline or following a budget.
Some of the most common types of contract bonds are performance bonds, bid bonds, and payment bonds. With these bonds, you provide surety to your customers, that they will be compensated, if the performance criteria aren’t met.
Where to get bonded?
Customer needs guarantee that the product or service they are investing in will offer the promised result.
Reduce business risk by contacting BondPro, a premier online bond company situated in California.
We enable all types of businesses and industries to make their business operations secure. We can access multiple bond markets and offer best rates for variety of surety bonds. If you want to obtain more information related to contract bonds, probate bonds, car-dealer bonds or mining bonds, get in touch with us.