HOW LONG DOES IT TAKE TO GET A BID BOND?
COUNT ON STOKES SURETY BONDS
So, you’ve found an amazing new project, and you want to bid on it immediately. You don’t want to waste any time since that could prevent you from getting the contract.
It suffices to say that you don’t want any delays because you want to maximize your chance of getting the job. To do that, you should place your bid quickly. Unfortunately, your Texas construction company won’t be able to play its bid until it has obtained a bid bond.
How long will it take to get a bid bond? How long will you need to wait before you can place your bid? Within this guide, you’re going to find out about the time frame and more.
TOO LONG; DIDN’T READ (TL;DR)
There is no set time on how long it may take to obtain a bid bond. However, some factors can either speed up the process or delay it further. These factors include: ensuring your documents are prepared in advance, a slow time period may result in quicker turnaround times, and it depends on the surety company you’re working with.
UNDERSTANDING THE BID BONDS
Anyone working in the Texas construction industry must be aware of construction surety bonds. They’re used daily and will prove to be very important to your business.
The purpose of bid bonds is to protect the project’s owner or owners. It guarantees compensation should the bidder fail to begin working on the project. Bid bonds are one of the most common surety bonds when it comes to the construction industry. To learn more about this in detail, please take a look at its meaning of bid bonds and the use of bid bonds in construction.
It has been proven that the cost of litigation will increase in the years to come. Furthermore, a tighter labor force will increase the likelihood that more claims will be filed. Bid bonds and other surety bonds give the project owner more peace of mind since they know they can protect themselves should something go awry.
BID BOND FUNCTION
Bid bonds are primarily used to protect the project owner. However, they offer perks to others as well. As a Texas construction contractor, you understand that the market is very competitive. When you find a new project, one or two of your competitors have likely already placed a bid on it. If you’re lucky, you’ll be first, but that might not help you secure the job. Bid bonds decrease the amount of competition you’ll face.
Companies that cannot obtain bid bonds will be removed from the competition pool immediately. The bid bond helps ensures that all bidding parties are financially stable and capable of fulfilling their duties. Thanks to the bid bond requirement, your chance of landing the gig is slightly increased. Either way, the project owner benefits most.
The bid bond tells the owner that the bidder is financially stable enough to accept the job for the stated bid price.
To learn more about this in detail, please take a look at how does a bid bond work?
WHY BID BONDS ARE IMPORTANT
Without surety bond requirements, Texas’s construction industry would be an unregulated mess. Thankfully, this is not the case. Thanks to bid bonds, the industry is controlled. The bid bond confirms that the contractor can and will comply with the bid contracts. Furthermore, it lets the owner know that the contractor will live up to their end of the bargain for the agreed price. Bid bonds are important because they help control the bidding process.
These bonds help remove potentially shady companies from bidding on projects. It also gives the owner added peace of mind. Without this requirement, project owners wouldn’t be able to hold the bidder accountable if they weren’t able to finish the job properly. If the bidder is underfunded, they may run out of money and not be able to complete the job.
With bid bonds, there is little chance that an underfunded company will be able to bid on the project, which helps you and the project’s owner.
UNDERSTANDING BID BOND REQUIREMENTS
What are the requirements to obtain bid bonds? Ultimately, the requirements will depend on the project and its owner. In general, you will be required to put up a certain percentage of the tender price as a penalty sum. That percentage will normally range from 5% to 10%. If you’re dealing with a federally funded project, you’ll need 20% of the bid. The costs of the bid bond will depend on a few factors such as the bid amount, the terms of the contract, and the jurisdiction.
To learn more about the costs in detail, please take a look at the following links:
Bid bonds may seem complex and confusing, but they don’t have to be. If you take your time and work with a good surety agent, you’ll be able to figure it out quickly. Be sure to contact Stokes Surety Bonds, so they can help you navigate these muddy waters.
HOW ARE BID BONDS WRITTEN?
Bid bonds are a written guarantee that will be given to the project owner. These bonds are written by a 3rd-party guarantor or a surety company. The bid bond lets the owner know that the contractor has the funds needed to complete the project. In most cases, they’ll be submitted as a cash deposit. Before you can purchase a bid bond from a surety, the surety company will perform in-depth financial research and background checks.
They want to make sure that they should work with your business. They’ll look at your credit history to determine whether they should give you a bid bond. Furthermore, they’ll also look at your company’s history and experience. However, things can be very different for contractors with no previous surety bonding history.
Finally, the surety will study your books and financial statements. If they believe you’re a good candidate, they’ll work with you and issue the bid bond. After that, you can submit the bond alongside your bid.
HOW LONG WILL IT TAKE TO GET A BID BOND?
You’ll want to obtain the bid bond as quickly as possible. Otherwise, you’ll lose your chance to bid on the project. So, how long will it take to obtain the bond? Sadly, there is no universal time frame. In certain cases, it may take a bit longer. Other times, you may be able to speed up the process. It depends on several factors. Below, you will learn more about the things that could speed up or delay the process.
First and foremost, you should know that your preparedness level could impact the process. If you don’t have your paperwork ready and your books in order, you’ll need to change that immediately as it’ll take significantly longer to get everything ready. If you’re ready and have everything you need, you may be able to obtain the bid bond in a few days. Otherwise, it will take longer.
Texas’s construction industry will see periods of increased and decreased activity. During the busiest times, it will normally take longer for the surety companies to issue new bonds. They’ll have a larger workload, so this will make things more difficult for them. With that being said, it will depend on the current condition of the industry. If you’re applying for a bid bond during a slow period, you can likely get it quicker than you would otherwise.
YOUR SURETY AGENT
Finally, you should realize that Texas is home to many surety agents. Not all agents are equal. Some will work relentlessly to ensure that you can get the bond you need as quickly as possible. Others will take their time, and this could prevent you from placing your bid in time. It is important to be careful when choosing a surety company for this reason.
GETTING BID BONDS FASTER
At the end of the day, you’ll want to work quickly to get the bid bond. You want to get bonded, so you can place your bid before you lose the opportunity to do so. The good news is that this shouldn’t be too difficult. If you make sure that you’re ready, you can likely speed up the process. First, you’ll want to check your paperwork and books. Make sure that everything is in order. If your books are in order, you can likely get the bond in three days or less.
Before applying for a bond, you should prepare and have everything ready. Also, you’ll want to pick a good surety agent. It is wise to develop a stronger relationship with one agent. If you do that, they’ll likely be happy to work hard for your company. You’ll be able to use this agent’s services repeatedly, and they’ll always do the best they can for you.
Do you need help finding a Texas surety company? Contact Stokes Surety Bonds because they’ll help team you up with one of the top agents in the state. With the right agent, you may receive your bid bond in a matter of hours.
If you’ve done everything by the books, there is a good chance that your bid is going to be accepted by the project owner. If this happens, you’ll want to move to the next step as quickly as possible. Once the owner has accepted your bid, you’ll need to purchase performance bonds and payment bonds. In most cases, you’ll be able to work with your existing surety company. If a bond company was willing to support your bid, they’ll likely help you get performance bonds and payment bonds too.
However, this may not always be the case. You may be dealing with a large bid spread, and this could scare the surety company. This may mean that there is a 10% or more difference between the first and second bids. In this type of scenario, you’ll need to tell the bond company why the project is a good idea. Even after you’ve done that, the surety company may decide not to support you.
If this happens to you, you’ll need to begin searching for another surety company. This is known as jumping a bid bond. You’ll want to follow through with the project, so it is wise to get bonded and move forward.
BID BOND ALTERNATIVES
Finally, you should understand that bid bonds are not the only option. With some contracts, you may be able to replace the bid bond with money or an irrevocable line of credit. Still, this may not be a good idea. The bid bond tends to be the best and safest option. If you want to use an alternative method, you’ll need money or borrowing capacity. Furthermore, you will still need to obtain a performance bond and payment bond. How will you get those?
If you put up money as collateral, you’re going to lose the ILOC. With a bid bond, the surety company will be required to investigate the claim. That gives you more protection and greater peace of mind. While you have other options, it is best to use a bid bond when bidding on a new project.
NEED A CONSTRUCTION SURETY BOND FOR A JOB? COUNT ON STOKES SURETY BONDS