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What to expect when obtaining your first surety bond

By April 11, 2024No Comments

Rarely is a first bond request planned for… More often the requirement arises when a business is going through something new. New customer, new public market opportunity, or new business relationship perhaps with a union. The point is that the business is expanding and likely encountering all the administrative pains that come with growth. On top of that, the company is now navigating securing its first bond, and needed it yesterday, a real test of “Surety Bond Success.”

This article walks through the process of obtaining a first bond and provides the reader with an expectation of the timeline, information that will be required, and understanding the agent relationship.


Comically I included “yesterday” above, but this is reality in many cases. The company is trying to capitalize on a new opportunity and that win is riding on securing the bond. What is a realistic timeline a company can expect? Infamously, the answer is “it depends.” Timeline depends on availability of information and how fast the company can accumulate the request. If everything is available, once the company turns the information over to their agent, the agent can move quickly to provide an initial analysis and follow-up with any necessary discussions with management to then go to a surety company, all in pursuit of “Surety Bond Success.”

Typically the availability of financial statements with the required level of service (compilation, review, or audit) provided by the external CPA firm is the biggest factor impacting timeline. The size of the bond request will dictate the required level of service needed on the financials. There isn’t a clear guideline as to the level of service and size of the bond, but a general frame of reference would be that bonds under $1,000,000 will largely be based on an owner’s credit and company internal financials. Bonds above $1,000,000 up to $3,000,000 can be completed with internal financial statements if the accounting department produces reliable financials and provides support for significant accounts, but this is typically where a surety company likes to see at least a compiled financial statement. Bonds above $3,000,000 likely require a review or at least a game plan to get the company to a reviewed financial statement level. An audit request will also be commonplace depending on the type of contractor and complexity of the operation when you are looking at a significantly sized program or individual bond. Again, this is a general frame of reference, agents with a significant financial background have the ability to get larger programs done with less and better navigate the surety company’s requests, marking another step towards “Surety Bond Success.”

Once all information is provided, plan for the surety company to spend multiple days evaluating the information and expect they will follow-up with additional requests. A surety company can move very quickly if the agent and client are responsive to requests. While a surety company has the information and is evaluating the client’s (referred to as principal in the surety relationship), maintain open discussion with the obligee (entity for which the service is being completed and that requested the bond) to keep them informed of status.

Information Request

Once you have connected with an agent, they will make the initial information request and perform their initial analysis and begin the process of finding the right surety company to work with on the opportunity. A typical request list will include the following:

  • 2-3 years of corporate financial statements
  • Most recent internally prepared financial statement
  • Supporting financial information such as loan agreements or significant account support
  • Most recently prepared schedule of work-in-process
  • Owner personal financial statements
  • Certificate of insurance
  • Resumes of key employees and management
  • Contractor questionnaire which will detail out critical relationships (related party, CPA, attorney, banking), completed project history, references, and other business and personal information

The information request stage will evolve to address surety company requests and can require an in-person meeting between the principal and surety company. The underwriting process for a surety bond is thorough. Surety companies will assess the company’s financial strength, industry experience, and past project performance to determine your eligibility and gauge the risk of backing your contractual promises. It’s not just about numbers; a company’s reputation and the strength of your relationships in the industry play a crucial role. Surety companies also have different appetites for different types of contractors and financial situations which is why it is important for the agent to help the principal find the right relationship, all key to achieving “Surety Bond Success.”

Agent Relationship

The surety agent is a critical liaison between your business and the surety company. This professional not only guides you through the application process but also helps in identifying the specific type of bond that best matches your business needs and project requirements. With deep insights into the surety market and a thorough understanding of underwriting criteria, the surety agent assists in compiling and presenting your financial records, business performance history, and any other pertinent information to effectively showcase your business’s stability and reliability to the surety company.

Moreover, your surety agent navigates the underwriting process, negotiates terms, and should offer valuable advice on improving your bonding capacity for future projects. Essentially, the surety agent ensures that the process of securing a bond is streamlined, understandable, and aligned with your business goals, making them an indispensable ally in fortifying your business’s reputation and operational capabilities.

Having a surety bond isn’t just about meeting a requirement; it’s a powerful tool to leverage for business growth. It demonstrates to potential partners and clients that you’re a safe bet, backed by a financial promise. Use this to your advantage in bids, proposals, and negotiations.

Remember, securing your first surety bond is a significant step, but it’s just the beginning of what can be a fruitful partnership between your business, your clients, and your surety provider. With the right approach, it can open doors to new opportunities and pave the way for sustainable growth and success.