CAN YOU GET A CONSTRUCTION BID BOND WITH NO HISTORY?
COUNT ON STOKES SURETY BONDS
Both the construction and real estate field are becoming increasingly competitive. This is because both industries are currently booming. With all the currently available opportunities, more and more people are getting into the industries.
Most people would think that this would be a good thing, as it offers consumers more and more options when it comes to choosing companies. While this is true, one needs to know that it makes choosing a construction company or contractor more difficult. Not only this, but all companies are not created equal. Some really care about providing customer care and support, while others are only looking to make a quick buck.
They simply don’t care who gets hurt or how they do it, they just want to make a dollar and get out. That being said, one way that some contractors are setting themselves and their companies apart is by getting bid bonds. Sometimes these bonds are required. This is especially true for commercial and federal projects. Regardless, bid bonds are extremely important in the construction and real estate development fields.
TOO LONG; DIDN’T READ (TL;DR)
If a contractor doesn’t have previous bonding history, the chances of obtaining bonds are extremely low, or they may face a higher premium from other surety companies. However, Stokes Surety Bonds ensures that contractors will not face any extra charges as they already have worked with many contractors that are new to the industry.
WHAT EXACTLY ARE BID BONDS AND WHAT DO THEY DO?
Every construction and development project starts with what is known as the bidding process. The bidding process involves different contractors placing bids on a project. A bid is an educated estimate as to what it will cost to complete a specific task. For instance, if you wanted to have a porch or patio built, you could get several quotes from several contractors or construction companies. Some quotes or bids might be similar, while some might be much higher or lower. In fact, this is a dirty tactic that a lot of today’s contractors are using.
They’ll give customers extremely low, enticing bids, get in, do shoddy work, and leave them holding bills that are nearly twice as much as they quoted the first-time around. This is specifically what bid bonds were designed for. Bids bonds behold contractors to adhere to bids they make on projects. Going back to the above scenario, if a company quotes you a price of $800 to build your porch, a bid bond will ensure that they are beholden to this price. They will not be able to raise the price once the job is completed. If the project costs more than they projected, it will be on them to cover the extra costs.
To learn more about this in detail, please take a look at the following links:
WHO ARE THE PARTIES INVOLVED WITH BID BONDS?
Whether you are dealing with bid bonds, performance bonds, or insurance, you’ll likely encounter complex and complicated terms that you won’t understand.
Understanding these terms is pertinent to understanding bonds and how you can benefit from them. That being said, there are three parties usually involved with all types of bonds and insurance. These entities would be the obligee, the principal, and the surety.
To start, the surety is the entity that issues the bond. Most of the time this will either be a specialized bonding company like Stokes Surety Bonds, a financial institution like a bank, or a local insurance company.
The other two parties involved in the equation are the obligee and the principal. The principal is the contractor or construction company. This is the party in the equation that is required to apply for the bond from the surety company.
The last party involved is the obligee, who is the customer or federal agency that is getting the world done. This is the entity that requires the principal to apply for the bond.
Whether one is applying for a bid bond or a performance bond, they’ll likely be doing so through a bank, insurance company, or a bonding company like Stokes Surety Bonds. While each company and issuing party is different, they do base their overall costs and requirements on specific factors. For instance, some issuing companies might require a contractor to meet specific standards and requirements before issuing them a bond. Some companies will check financial history as well as previous claims against past bonds.
To learn more about the requirements for both of these bonds in detail, please take a look at the following links:
To learn more about costs for both of these bonds in detail, please take a look at the following links:
If your credit history is bad and you’ve had a lot of claims filed against previous bonds, you’ll likely pay more for a bond, if you even qualify in the first place. That being said, some providers also base the cost and requirements of a bid bond on the number of years you’ve been in business. If you are just starting or don’t have any previous experience, you might not even be able to get a bond. What would one do in these situations?
LOOKING FOR SPECIFIC BONDING COMPANIES
As you just learned surety companies base the costs of their bonds as well as their requirements on specific factors. Unfortunately, past bonds history and previous experience is one of these factors. If you are new to the industry or don’t have any experience, you might have a hard time getting a bond. If you do get one, you’ll likely end up paying more.
This is why it is pertinent to look for companies that specialize in dealing with new companies with no previous history. One example of one of these companies would be Stokes Surety Bonds. They work with new companies all the time that don’t have any previous history. And, they don’t tack on added fees for being new to the industry.
NEED A CONSTRUCTION SURETY BOND FOR A JOB? COUNT ON STOKES SURETY BONDS