Improve Your Contractor Purchasers’ FastBond to a Customary Bond Program

This put up is a part of a sequence sponsored by Previous Republic Surety.

Your contractor purchasers immediately have extra alternatives to work on higher-value tasks in each the private and non-private sectors. In keeping with an business outlook report by the Related Common Contractors of America, in 2024, contractors anticipate demand for development tasks 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 tasks, energy tasks and healthcare amenities.

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

Many smaller or newer-in-business contractors receive bonds on smaller sized tasks by way of abbreviated underwriting packages equivalent to Previous 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 have a look at why your contractor purchasers ought to contemplate transferring from a FastBond-type program to a regular contract bond program and the way they will achieve this.

The contractor needs to develop and improve earnings Changing to a regular bond program opens up alternatives for bigger and extra numerous contracts. Competitors is proscribed on many bigger contracts, serving to to boost the potential of elevated earnings.
The price of the bond itself. FastBond packages are designed for a contractor that has occasional bond wants, and FastBonds are sometimes charged larger charges. Previous Republic Surety writes FastBonds that may go as excessive as $2 million combination, usually at a $20 to $30/thousand fee. Customary program charges are decrease, enabling the contractor to tender extra aggressive bids and probably earn higher margins on their work.

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

Customary bond packages require extra subtle monetary info and value programs. Contractors can improve their bonding capability with a regular bond program by following these 5 steps:

Type 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.
Improve the standard of your monetary assertion presentation. CPA-prepared financials add credibility to the knowledge you present. A CPA, ideally a construction-oriented CPA, understands the significance of robust inner price programs 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 regular surety program ought to greater than pay for the extra prices {of professional} CPA companies.
Develop working capital and company web value. Make the dedication to construct up your steadiness sheet to assist your required program by forgoing giant bonuses or pointless gear purchases. As soon as the steadiness sheet helps your program, surplus capital will be withdrawn as desired. This exhibits that you’re prepared to do what it takes now to make your organization profitable in the long run.
Present proof of inner controls. Sturdy programs that monitor job prices, handle the gathering of receivables, present for the immediate cost of payments when due, decrease surplus stock, and improve worker efficiency are all vital to the success of your organization. The next greatest practices will contribute to improved bottom-line profitability:

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

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 wish to bid and the way your expertise and capabilities qualify you to efficiently carry out it, the extra assured the surety will probably be in offering the bond. Moreover, your willingness to meet underwriting necessities will enormously enhance your probability of acquiring elevated surety assist.

Previous Republic Surety Firm prides itself on taking a consultative method with contractors which can be prepared to comply with the wanted steps to extend their bonding capability. We are able to give you the recommendation that 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 perfect bond producers within the enterprise.

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