Improve Your Contractor Shoppers’ FastBond to a Normal Bond Program

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

Your contractor purchasers at the moment have extra alternatives to work on higher-value initiatives in each the private and non-private sectors. In accordance with an trade outlook report by the Related Normal Contractors of America, in 2024, contractors anticipate demand for development initiatives in 14 out of the 17 development classes surveyed to extend in 2024. A few of the sectors with the most important anticipated development embody sewer and water, freeway and bridge, federal initiatives, energy initiatives and healthcare services.

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

Many smaller or newer-in-business contractors receive bonds on smaller sized initiatives by way of abbreviated underwriting applications reminiscent of 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 monetary and different underwriting info 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 purchasers ought to think about shifting from a FastBond-type program to a regular contract bond program and the way they will achieve this.

• The contractor needs to develop and improve income Changing to a regular bond program opens up alternatives for bigger and extra numerous contracts. Competitors is restricted on many bigger contracts, serving to to lift the potential for elevated income.
• The price of the bond itself. FastBond applications are designed for a contractor that has occasional bond wants, and FastBonds are usually charged larger charges. Previous Republic Surety writes FastBonds that may go as excessive as $2 million mixture, usually at a $20 to $30/thousand price. Normal program charges are decrease, enabling the contractor to tender extra aggressive bids and probably earn higher margins on their work.

5 steps to transition from a FastBond program to a regular program

Normal bond applications require extra subtle monetary info and price programs. Contractors can improve their bonding capability with a regular bond program by following these 5 steps:

1. Type a partnership together with your key monetary advisors. These embody knowledgeable surety agent, a construction-oriented CPA, a financial institution that understands development lending and, in fact, your surety underwriter.
2. Enhance the standard of your monetary assertion presentation. CPA-prepared financials add credibility to the knowledge you present. A CPA, ideally a construction-oriented CPA, understands the significance of robust inside price programs and may present the percentage-of-completion format most well-liked by sureties. CPAs will help you in presenting your monetary profile in the very best gentle. Further income earned and cash saved by changing to a regular surety program ought to greater than pay for the extra prices {of professional} CPA companies.
3. Develop working capital and company internet price. Make the dedication to construct up your steadiness sheet to help your required program by forgoing massive bonuses or pointless tools purchases. As soon as the steadiness sheet helps your program, surplus capital could be withdrawn as desired. This reveals that you’re prepared to do what it takes now to make your organization profitable in the long run.
4. Present proof of inside controls. Sturdy programs that observe job prices, handle the gathering of receivables, present for the immediate cost of payments when due, decrease surplus stock, and improve worker efficiency are all essential to the success of your organization. The next finest practices will contribute to improved bottom-line profitability:

• Unannounced job website inspections
• Using accepted contract types
• Correct documentation of change orders
• Proof of insurance coverage for all subcontractors
• Safety of belongings reminiscent of tools 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 info you possibly can present the surety relating to the job you need to bid and the way your expertise and capabilities qualify you to efficiently carry out it, the extra assured the surety shall be in offering the bond. Moreover, your willingness to satisfy underwriting necessities will enormously enhance your likelihood of acquiring elevated surety help.

Previous Republic Surety Firm prides itself on taking a consultative strategy with contractors which can be prepared to comply with the wanted steps to extend their bonding capability. We will offer you the recommendation you could take your bonding program to the subsequent degree. Contact your bond agent for extra info, or contact us so we will join you with the perfect bond producers within the enterprise.

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