Guide to Obtain a Commercial Surety Bond

Commercial surety bonds are not easy to obtain. In most cases, applicants get a 15% rate but if you simply fill out the form completely and you provide the ideal financial statements, you can get rates as low as 2%–3%.

Follow this simple guide and your application can be approved in no time.

About Surety Bond

Surety bonds are of different types and if you’re planning to get a commercial surety bond, you can use this article as a guide. There is a way to lower the premium but you must follow the instructions accordingly. Bond applications can be hard and there is little chance for you to get a lower rate. To ensure fast processing of your application, the form should be filled out completely. Prepare the financial statements of your business because this is very important. The statements should be attractive enough for the surety company. You can hire a CPA to do the financials for you. Everything should be clear and clean; and it should include disclosures and full notes. Accrual basis is preferred by the surety companies so make sure that you follow the format. The surety company will definitely look into your working capital, employee loans or limiting shareholder, and owner’s equity draw. The working capital is the amount of current assets after the current liabilities have been deducted. This will reveal a lot of information about your business. With strong working capital, you can convince the company that your business can easily handle monthly bills.

When it comes to loans, whether personal or to employees, you need to try to limit it because surety companies don’t like it much. The owner capital draw and fiscal year can affect your application. You need to be aware that a minimum is required when it comes to equity and this will depend on the bonded liability. If you’re asked to submit a resume, make it very professional. Provide all the needed information in a professional manner so that you can get a lower rate. You will also need to provide a personal financial statement. Put only real figures and don’t inflate them. False information can ruin your reputation and can be the reason for denial of your application.

Credit Report

The surety company will see you as high risk if your credit report is not very good. Try to check the report at least once a year so that you can correct the flaws. There are ways to improve your credit score and it’s best to pay off your monthly dues on time to avoid any problems.

Getting a commercial surety bond is not easy. You have to abide by the rules and determine the things that are favorable to the company. You’re in luck if you can get a 2% to 3% rate because most applicants receive 15% rates.


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