Surety bonds aren't exactly a topic that comes up every day. However, there are certain scenarios in which surety bonds should be a topic of discussion; especially when it comes to construction contracts. If you are a small construction firm just starting out in the business, it's vital that you consider a surety bond to protect your business.
Understanding a Surety Bond
A surety bond is somewhat confusing since they are basically one part credit and one part insurance. These bonds are also a three-part contract between the company who is securing your bond, your construction firm and the customer who you are completing the work for. The purpose of a surety bond is to provide a financial guarantee to the customer in the event your firm is unable to perform per the terms of the agreement.
Surety Bond Benefits for Contractors
There are a number of benefits you can expect from a surety bond for your contracting company; here are some of them.
A surety bond gives your new firm the look of a professional and established contractor firm. This type of reputation is vital for both those customers looking to have a home built or large commercial customers looking to build a massive complex. This type of bond will give customers greater confidence that your firm is prepared and equipped.
The world of construction is full of ups and downs; there are all sorts of incidents that could happen that could lead to a costly outcome, such as not being on schedule. For example, if a material shortage causes your project to go over deadline and there is a clause in the contract that has a financial penalty for this type of mishap, a surety bond will ensure your company is protected and doesn't suffer a financial loss.
Larger Business Pool
When you have a surety bond, you open yourself up to a larger potential business pool. Particularly when it comes to large organizations, such as government agencies, they will only do business with contracting firms that have a surety bond. If you don't have this for your company, you may not be able to secure these contracts. Since many of the larger contractors often mean greater profits and even more business opportunity, this is not something you don't want to overlook.
Ensure your business is protected with a surety bond, reach out to a company like Service Insurance Company who can assist you with this process.Share