We Got It Done Wednesday!
We often receive calls from Agents and Clients when bonding is needed for a new business. Obtaining surety support for start-up companies can definitely be more complex. Most surety companies want to provide bonds to companies that have been in business for at least three years with a successful/profitable operating history, including a history of completing projects of the size for which they are requesting bonding support. Which brings us to our first success story from our Vice President, Rita Jorgenson.
We received a call about a new company that needed additional bonding, but their agent was struggling with finding placement due to being in business for less than one year. They had initially requested a bonding program between $2 – $2.5 Million, but through deeper discussions and education, it was determined that they were only needing bonding program up to $1.5 million. Due to that size bonding program, Rita was able to run this through a short-cut plus program.
A short-cut plus program is a bonding program based off personal credit along with additional information. The additional information can be any combination of company financials, personal financials, verification of previous experience, additional indemnity, etc. The key to gathering the additional information is that it adds strength to the picture to make up for the short time in business. Under this program, Rita was able to qualify them for a $750k single/$1.5 million aggregate bonding program.
While this bonding limit may not be a long-term solution for a growing company, it can enable a new company to get bonded for larger jobs than they would otherwise be able to qualify for. They can then develop a bonding history while completing projects they can get references on to help them get approved for larger projects in the future. And in the meantime, Rita will be utilizing this transition period to educate the company on the items they need to put in place in order to grow to the next stage of bonding support.
A huge shout-out to Rita for getting this new bonding program put in place! Follow along next week to see what our Commercial Bond Manager, Kristi Enevoldsen, was able to get done.
