Upgrade Your Contractor Clients’ FastBond to a Standard Bond Program

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

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

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

Many smaller or newer-in-business contractors receive bonds on smaller sized initiatives by abbreviated underwriting packages corresponding 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 data 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 shoppers ought to contemplate transferring from a FastBond-type program to a normal contract bond program and the way they will achieve this.

• The contractor desires to develop and improve income Changing to a normal bond program opens up alternatives for bigger and extra various contracts. Competitors is proscribed on many bigger contracts, serving to to lift the potential for elevated income.
• 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 price. Customary 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 normal program

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

1. Type a partnership together with your key monetary advisors. These embrace knowledgeable surety agent, a construction-oriented CPA, a financial institution that understands building lending and, after all, your surety underwriter.
2. Enhance 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 inside price programs and might present the percentage-of-completion format most popular by sureties. CPAs will help you in presenting your monetary profile in the very best mild. Further income earned and cash saved by changing to a normal surety program ought to greater than pay for the extra prices {of professional} CPA companies.
3. Develop working capital and company internet value. Make the dedication to construct up your steadiness sheet to help 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 keen to do what it takes now to make your organization profitable in the long run.
4. Present proof of inside controls. Strong programs that monitor job prices, handle the gathering of receivables, present for the immediate cost of payments when due, reduce surplus stock, and improve worker efficiency are all necessary to the success of your organization. The next greatest practices will contribute to improved bottom-line profitability:

• Unannounced job website inspections
• Using authorized contract varieties
• Correct documentation of change orders
• Proof of insurance coverage for all subcontractors
• Safety of property corresponding to gear and supplies
• Written security insurance policies to reduce job website hazards
• Incentives that reward staff for bottom-line revenue

5. Present details about the job to be carried out. The extra detailed data you may present the surety relating to 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 likely be in offering the bond. Moreover, your willingness to meet underwriting necessities will significantly enhance your likelihood of acquiring elevated surety help.

Previous Republic Surety Firm prides itself on taking a consultative strategy with contractors which are keen to observe the wanted steps to extend their bonding capability. We are able to give you the recommendation you might want to take your bonding program to the subsequent degree. Contact your bond agent for extra data, or contact us so we will join you with the perfect bond producers within the enterprise.

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