performance surity bonds

[teamtree]

The procedure for getting a bond is pretty simple, but it take planning. The contract you are bidding on will typically have a bonding requirement and a "bids close" date. Most have a bid bond requirement, as well.

You make it sound so simple. I would say 95% of the people who do tree work could not get a performance bond within 2 weeks, if at all. You are right, it takes planning and lots of it. You also have to be prepared to sign your assets over. I

If you have gotten a bond and have experience....you are right...it is simple....but most have not and there lies the problem.

Insurance companies took big hits on these performance bonds in the recent past and are not so eager to hand them out.

For the first time, it is a painful process, unless you have some free cash to put up to get the bond.

Hell, if you want to find out....call your insurance agent and and ask him....

 

[pdqdl]

DON"T call your insurance agent/broker except to price check; maybe to give them a chance at doing your bonding. Most of them are rip-off artists that will sell your bond request to a surety bond writer and add their markup. It doesn't help that they don't make much money writing the bond, either. That wouldn't be a problem, except that very few (in my experience) are experienced at getting the bonds. They tend to be more conservative, and they are generally sticklers for details because they are not experienced at it.

Find a company that specializes in writing surety/performance bonds. You will probably get faster service and a lower rate, with a better chance of getting the bond you request.

Years ago, I had a line of bonding that I could rely on. Call the broker, request the bond. They check out your bonding limits, then it is as simple as picking up the bond with your bid package.

You can set up your bonding limit LONG before you submit a bid. Not only is it easier, it's more reliable and cheaper. I would say that 100% of the companies that make an application will get a line of bonding within two weeks. They will need to have current financial statements with documentation for the last 3 years (providing they don't have a history of loosing money or contracts). After that, it is only a matter of growing your bonding limit.

 

[teamtree]

I was not trying to come down on your thoughts.....you sound well versed in bonding and other financial matters. For others, and dare I say most tree guys are not familiar with this subject, they are going to call their insurance agent to start....and yes, that is where it gets tricky. If you go directly to the broker and you do not have a clue as to what they need, you will be in for a treat.

You paint a pretty bright picture but in reality, there is some ground work and preparation in getting to the point where you are at...and as I said earlier...the first time getting a bond is the toughest as their is no track record for those going to get it for their first time....IMHO....and I feel others should be aware of what reality is if the ever need to get a performance bond for the FIRST TIME, ever.

 

[teamtree]

You can set up your bonding limit LONG before you submit a bid. Not only is it easier, it's more reliable and cheaper. I would say that 100% of the companies that make an application will get a line of bonding within two weeks. They will need to have current financial statements with documentation for the last 3 years (providing they don't have a history of loosing money or contracts). After that, it is only a matter of growing your bonding limit.

BULL####!!!!.....100%

The American way is for the rich to get richer and bonding is another way to hold off the small companies. Large well established companies have the bonding and are ahead of the game.....but when a smaller company want to grow and can do something cheaper but may not have the assets to support the bonding for larger projects so the larger companies keep on getting the contracts. It is a very well known fact in the General Contracting arena and in certain areas the same companies keep getting the large contracts...

LOL

I would have a hard time believing there are no companies out their with a spotty credit report or lack the financial assets to support a sizable bond.

If there is a minor blemish they will deny

Yes, once your get your bonding then it is "Boost your Bonding" time and play with the books.....at least my experience with a big accounting firm tells me that is the case.....

 

[pdqdl]

Teamtree: it sounds like you are injecting your personal views into what should be a simple matter of business. I'm sorry that you have had business disappointments in the past, but that doesn't change how things really work.

You said"

BULL####!!!!.....100%

...

I will confess, you are right. What I meant to say was that it will not take more than 2 weeks to get your bonding approved, and that most any company can get a line of bonding. Sufficient to get the contract they are shooting for? Ho! Ho! Ho! Not likely at all, if their goals are bigger than their assetts.


It is certainly true that many bond requests are denied. This is because a bond (as provided by a bonding company) is nothing more than a promise to pay the bond and then sue the contractor for the loss. In this fashion, the bond holder is protected by the bonding company from needing to worry about involving the lawyers and collecting the money when there is a failure.

The bonding company is only going to issue the bond when they think they are nearly risk free in the transaction. This means that in order to get a bond, you need to be able to show that your net worth is greater than the value of the bond AFTER the lawyers and the auctioneers get done picking the value out of your bankrupt ass. Or...that you will be able to raise enough money to pay their demands in the event of a failure.

Or...that you have enough experience and commitment to prevent any involvement from the bonding company. The bonding companies are not interested in taking risks. They are only interested in writing bonds for a "sure thing".

So! Get your CPA audited income statements and balance sheets for the last 3 years along with your tax returns, take them down to the bonding company, and tell me that they won't do business with you!

Oh! You wanted a $1,000,000 bond, and your gross income last year was only 500,000, and your net worth is only $100,000 due to some big loans you have outstanding?

Would YOU sign that bond for somebody else under those conditions?

 

[outofmytree]

Ouch.

I sincerely hope that this system never crosses the Pacific.

No rep for you atm pdqdl but I second TV's thought that you put a lot of information down in an easy to understand format. Easy enough for me to be grateful we don't have this particular problem to deal with atm.

 

[treevet]

Teamtree: it sounds like you are injecting your personal views into what should be a simple matter of business. I'm sorry that you have had business disappointments in the past, but that doesn't change how things really work.

You said"


I will confess, you are right. What I meant to say was that it will not take more than 2 weeks to get your bonding approved, and that most any company can get a line of bonding. Sufficient to get the contract they are shooting for? Ho! Ho! Ho! Not likely at all, if their goals are bigger than their assetts.


It is certainly true that many bond requests are denied. This is because a bond (as provided by a bonding company) is nothing more than a promise to pay the bond and then sue the contractor for the loss. In this fashion, the bond holder is protected by the bonding company from needing to worry about involving the lawyers and collecting the money when there is a failure.

The bonding company is only going to issue the bond when they think they are nearly risk free in the transaction. This means that in order to get a bond, you need to be able to show that your net worth is greater than the value of the bond AFTER the lawyers and the auctioneers get done picking the value out of your bankrupt ass. Or...that you will be able to raise enough money to pay their demands in the event of a failure.

Or...that you have enough experience and commitment to prevent any involvement from the bonding company. The bonding companies are not interested in taking risks. They are only interested in writing bonds for a "sure thing".

So! Get your CPA audited income statements and balance sheets for the last 3 years along with your tax returns, take them down to the bonding company, and tell me that they won't do business with you!

Oh! You wanted a $1,000,000 bond, and your gross income last year was only 500,000, and your net worth is only $100,000 due to some big loans you have outstanding?

Would YOU sign that bond for somebody else under those conditions?

Good use of paragraphs to break up thoughts and not boggle the reader by a huge non stop smear of print as is so often done.