Do you know what advice to give your clients when they want to increase their bonding capacity, but the surety won’t get on board for a bond program of that size? If the answer is no, it may be beneficial to know that Goldleaf does. To be completely honest, increasing a company’s bonding capacity doesn’t happen by accident. It takes a very thorough understanding of what the surety is looking for while implementing a solid plan to significantly grow a bonding program. Not only is this a service that we offer, but it is a pillar that Goldleaf stands on; educating our clients to grow their bonding programs as their company grows. Here is an example of how one of our clients was able to do this with Goldleaf’s support.
One of our Agent partners came to our President, Jack Anderson, with a new account that was wanting to establish a $20MM bonding program. Unfortunately, upon Jack’s initial review of the underwriting information, the financial statements were too weak to qualify the company for a bond program of that size. Jack was able to get them qualified for a bonding program of $1MM single/$4MM aggregate for the meantime. Both parties understood that this bond program would need to grow quickly to meet their true bonding capacity needs. Jack and the client then worked on developing a strategic plan to increase both their equity and working capital, identify what the income statement needed to reflect, and start working towards obtaining a CPA reviewed financial statement to work towards getting approved for a bonding program of $20MM.
Over the following year, the client implemented all of Jack’s suggestions. As a result, in 2024, they were able to qualify for a bonding program of $7MM single/$20MM aggregate. Now, they are moving on to the next area of focus, which entails improving their internal risk management. This plan identified ways to tighten up their subcontract agreements, establishing a subcontractor bond back policy, along with other items. As the client continues to work on these strategies, Jack foresees the company growing to a $15MM single / $30MM aggregate bond program for 2025.
As you can see, this growth did not happen by mistake. It took a lot of education, planning, and implementation of specific strategies to put themselves in a place where a surety would feel comfortable supporting a bond program of this size. If you want to learn more about how Goldleaf can help you or your clients grow their bond program, give us a call today.
