Surety Bond Education

Re-posted from the June issue of Austin Construction News: As many celebrate their fathers this June, Eric Schmalz reflects on the man who was the greatest influence on his life and surety career.          “My dad was a Marine officer in Vietnam and then he transitioned those leadership skills into success as a surety company executive,” Schmalz says. “Having my father’s example laid out in front of me, I knew I wanted to be in business. I learned a lot from him about being a leader and working hard.”          Honolulu-born and Philadelphia-raised, Schmalz earned an Economics degree from the […]

The goal of the Small Business Administration’s (SBA’s) Surety Bond Guarantee Program is to allow small businesses to obtain bid bond and payment and performance bonds it needs to further its business enterprise. For various reasons such as weak credit history or low working capital, these small businesses may not be able to obtain the bonding they need in the standard surety marketplace. The SBA supports attaining this goal by providing financial backing, the bond guarantee, to participating surety companies.  In other words, the SBA does not work directly with businesses in this program but through a surety company. How […]

A Maintenance Bond is a type of surety bond guaranteeing good condition of constructed improvements for a period of time after acceptance of the work. When Are Maintenance Bonds Required? We commonly see Maintenance Bonds required in conjunction with commercial development projects. As part of the scope of the project infrastructure improvements such as water/waste water service, curb inlets and streets are constructed. These improvements are turned over to the municipality after acceptance so they require a Maintenance or Warranty period to make sure those assets don’t deteriorate due to poor workmanship or poor materials.  A standard Maintenance period is […]

A Supply Bond is a type of contract surety bond. Specifically it is used to guarantee a contract for supply of materials.  For example, a construction project may require purchase of components that are high-dollar, specialized, and/or critical to completion of the project.  A Supply bond could help manage the financial risk of not getting your delivery on time or at all. Is a Supply Bond Different Than A Payment & Performance Bond? Unlike a Performance bond, which would include labor exposure and execution of construction, a supply bond guarantees delivery of materials or equipment from point A to point […]

Public owners such as the federal and state governments, counties, cities, school districts and the like take in our tax dollars and some of it, if we’re lucky, goes toward capital improvements that we get to use every day.  These public owners have a duty to taxpayers to get the best value available and so they often offer projects under competitive bid letting structure. Financial Security The owner will prepare plans, specs, and an engineer’s estimate for use by contractors as a basis for their estimate or bid.  Once the contractor has prepared their bid, they submit to the owner […]

Here are some points to consider as you work towards building your bonding capacity. Before getting into that we’ll say that there are no hard and fast rules, only guidance, when it comes to bonding. There are too many variables to consider here.  But remember – the decisions you make every day will eventually show up in your financials a.k.a. your “Report Card”! Most of these areas take time and consistent effort to grow but we’ll start off the list with a couple that are immediately actionable. How Do I Increase My Bonding Capacity? Build your personal credit score. If […]