Upgrade Your Contractor Clients’ FastBond to a Standard Bond Program

This put up is a part of a collection sponsored by Outdated Republic Surety.

Your contractor purchasers at this time have extra alternatives to work on higher-value initiatives in each the private and non-private sectors. In keeping with an business outlook report by the Associated General Contractors of America, in 2024, contractors count on demand for development initiatives in 14 out of the 17 development classes surveyed to extend in 2024. Among the sectors with the most important anticipated development embody sewer and water, freeway and bridge, federal initiatives, energy initiatives and healthcare services.

This is a perfect time for you and your contractor purchasers to debate actions and methods that may assist them qualify for elevated bonding capability.

Many smaller or newer-in-business contractors acquire bonds on smaller sized initiatives by abbreviated underwriting applications similar to Outdated Republic Surety Firm’s FastBond program to get the wanted bonds for these contracts. FastBond streamlines the underwriting course of, is primarily credit-based, and doesn’t require the extent of economic and different underwriting info wanted to qualify for the standard bond program for bigger contracts.

Causes to improve a contractor’s bonding capability

Let’s take a look at why your contractor purchasers ought to contemplate shifting from a FastBond-type program to a typical contract bond program and the way they’ll accomplish that.

• The contractor needs to develop and enhance earnings Changing to a typical bond program opens up alternatives for bigger and extra various contracts. Competitors is proscribed on many bigger contracts, serving to to lift the potential of elevated earnings.
• The price of the bond itself. FastBond applications are designed for a contractor that has occasional bond wants, and FastBonds are sometimes charged larger charges. Outdated Republic Surety writes FastBonds that may go as excessive as $2 million combination, typically at a $20 to $30/thousand price. Normal program charges are decrease, enabling the contractor to tender extra aggressive bids and presumably earn higher margins on their work.

5 steps to transition from a FastBond program to a typical program

Normal bond applications require extra refined monetary info and price methods. Contractors can enhance their bonding capability with a typical bond program by following these 5 steps:

1. Kind a partnership together with your key monetary advisors. These embody knowledgeable surety agent, a construction-oriented CPA, a financial institution that understands development lending and, in fact, your surety underwriter.
2. Improve the standard of your monetary assertion presentation. CPA-prepared financials add credibility to the data you present. A CPA, ideally a construction-oriented CPA, understands the significance of sturdy inner price methods and may present the percentage-of-completion format most well-liked by sureties. CPAs will help you in presenting your monetary profile in the very best gentle. Further earnings earned and cash saved by changing to a typical surety program ought to greater than pay for the extra prices {of professional} CPA companies.
3. Develop working capital and company web price. Make the dedication to construct up your steadiness sheet to help your required program by forgoing massive bonuses or pointless gear purchases. As soon as the steadiness sheet helps your program, surplus capital could be withdrawn as desired. This reveals that you’re keen to do what it takes now to make your organization profitable in the long run.
4. Present proof of inner controls. Strong methods that observe job prices, handle the gathering of receivables, present for the immediate fee of payments when due, reduce surplus stock, and improve worker efficiency are all necessary to the success of your organization. The next finest practices will contribute to improved bottom-line profitability:

• Unannounced job web site inspections
• The usage of permitted contract kinds
• Correct documentation of change orders
• Proof of insurance coverage for all subcontractors
• Safety of belongings similar to gear and supplies
• Written security insurance policies to reduce job web site hazards
• Incentives that reward workers for bottom-line revenue

5. Present details about the job to be carried out. The extra detailed info you’ll be able to present the surety concerning the job you need to bid and the way your expertise and capabilities qualify you to efficiently carry out it, the extra assured the surety shall be in offering the bond. Moreover, your willingness to satisfy underwriting necessities will enormously enhance your likelihood of acquiring elevated surety help.

Outdated Republic Surety Firm prides itself on taking a consultative strategy with contractors which can be keen to comply with the wanted steps to extend their bonding capability. We will give you the recommendation you must take your bonding program to the following stage. Contact your bond agent for extra info, or contact us so we will join you with the very best bond producers within the enterprise.

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Contractors