What Business Information Do You Need To Qualify For A Supply Bond?
Posted on: 25 July 2017
If your business will provide construction materials for a government or municipal building project, you may be asked to obtain a supply bond. As a supply contractor, you'll have to find supply contractor bond services on your own and prove that you have adequate coverage.
Why do some construction project managers -- especially on government projects -- require these bonds? It helps ensure you'll come through on your end of the deal and provide needed materials of a specific quality and on schedule. If you don't come through, your failure will set back the entire project, while the general contractor tries to find another supplier.
What You Need to Provide
If you haven't had to get a supply bond before, you may be wondering about the process. The first step is to provide your business details to a surety bonds provider. Typically, the agency will ask for:
- Business financial statements that show you have enough financial resources to procure the supplies.
- Proof of insurance that you'd be covered for an accident or another issue on the job site.
- Personal credit details. Small business owners may need to provide their own information to prove they are reputable.
- Previous bond experience. If you've ever had to get a supply bond before, information about that bond and that you delivered on your promises can help show you're not a risk.
Why Bond Agencies Ask for Information
The supply contractor bond services company needs to do their due diligence to make sure you haven't had a history of making mistakes on the job. If your history shows that you've always been trustworthy and delivered materials on time, that will help them make a decision to provide a bond for you.
The bond provider needs to be sure that you won't run out of funds to buy supplies, thus leaving the project at risk. They also want to make sure there are no claims against you for similar problems in the past.
All your information is used to determine what risk level your small company is at. If your personal information and business information indicates that you'll be a low risk, you'll get a lower price on the bond you're seeking. So it makes sense to provide as much information as the bond agency requests to prove that you're a reputable business.
Make Your Business Information Look Its Best
You can't overcome poor business practices and credit, but there are a couple of things you can do to make sure you qualify for the best bond pricing available:
- Get all your financials in order. If you have outstanding invoices, collect as much as you can before providing your records. That will show you have a higher net profit and more financial resources for purchasing the materials you will provide for the job.
- Talk to your insurer. Make sure there are no outstanding issues with your business insurance policy and that you have adequate insurance coverage for your size of the company and typical jobs.
Contact a company like Service Insurance Company for more information and assistance.Share