So you are new in business as a contractor. And you would like to be able to perform public works projects. You might ask yourself, “Can I get a bond as a new business?” In order to bid on public works projects you must provide bid security and the safest bid security is a bid bond. Can you qualify for bonds as a new business?
Key Items To Qualify For Bonding As A New Business
There are three important things that a surety will look at in bonding a new business:
- Personal Credit Score
- Prior Experience
- Financial Strength
The surety company will pull your personal credit as part of the underwriting process to qualify for surety bonds. Your personal credit score is an important factor. But it isn’t just the score that they will look at. They will look at the composition of your credit report too. They will be looking to make sure that you pay your bills on time, that you don’t have credit cards that are maxed out and you don’t have outstanding collection items amongst other things. A personal credit score in excess of 700 is ideal when you are a new business and looking for surety bonds.
Your resume will be a key component of the underwriting process when own a new business that needs surety bonds. Be prepared to submit a current resume. If you are able to demonstrate that you have previously completed jobs of a similar size and scope for another company that will be very helpful. If you have any letters of recommendation or someone that would be able to provide a reference that can go a long way to help you qualify for surety bonds.
It will be helpful to qualify for surety bonds if you are able to provide a current financial statement for the business. Or a personal financial statement for the owner(s) of the business. If you are able to demonstrate that you have the financial wherewithal to complete the size of project you are interested in that will help you qualify.
Schmalz & Associates Can Help Your New Business Obtain Bonds!
Nicole and Eric Schmalz are surety professionals that can assist your new business in obtaining bid, performance or payment bonds. Please reach out to us via phone or email to discuss your surety bonds needs. Call us at 512-640-6444. Email Nicole or Eric.