Improve Your Contractor Shoppers’ FastBond to a Commonplace Bond Program

This put up is a part of a collection sponsored by Outdated Republic Surety.

Your contractor purchasers as we speak have extra alternatives to work on higher-value tasks in each the private and non-private sectors. In response to an business outlook report by the Related Normal Contractors of America, in 2024, contractors count on demand for development tasks in 14 out of the 17 development classes surveyed to extend in 2024. Among the sectors with the most important anticipated development embody sewer and water, freeway and bridge, federal tasks, energy tasks and healthcare amenities.

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contractors get hold of bonds on smaller sized tasks by way of abbreviated underwriting applications akin to Outdated Republic Surety Firm’s FastBond program to get the wanted bonds for these contracts.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 economic 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 have a look at why your contractor purchasers ought to take into account transferring from a FastBond-type program to an ordinary contract bond program and the way they’ll achieve this.

• The contractor desires to develop and improve earnings Changing to an ordinary bond program opens up alternatives for bigger and extra numerous contracts. Competitors is restricted on many bigger contracts, serving to to lift the potential of elevated earnings.
• The price of the bond itself. FastBond applications are designed for a contractor that has occasional bond wants, and FastBonds are usually charged greater charges. Outdated Republic Surety writes FastBonds that may go as excessive as $2 million combination, typically at a $20 to $30/thousand charge. Commonplace program charges are decrease, enabling the contractor to tender extra aggressive bids and presumably earn higher margins on their work.

5 steps to transition from a FastBond program to an ordinary program

Commonplace bond applications require extra subtle monetary info and price methods. Contractors can improve their bonding capability with an ordinary 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. Improve the standard of your monetary assertion presentation. CPA-prepared financials add credibility to the data you present. A CPA, ideally a construction-oriented CPA, understands the significance of sturdy inside value methods 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 mild. Extra earnings earned and cash saved by changing to an ordinary surety program ought to greater than pay for the extra prices {of professional} CPA providers.
3. Develop working capital and company internet value. Make the dedication to construct up your stability sheet to help your required program by forgoing massive bonuses or pointless tools purchases. As soon as the stability sheet helps your program, surplus capital might 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 methods 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 necessary to the success of your organization. The next greatest practices will contribute to improved bottom-line profitability:

• Unannounced job web site inspections
• The usage of accepted contract varieties
• Correct documentation of change orders
• Proof of insurance coverage for all subcontractors
• Safety of belongings akin to tools and supplies
• Written security insurance policies to reduce job web site hazards
• Incentives that reward workers for bottom-line revenue

5. Present details about the job to be carried out. The extra detailed info you possibly can present the surety concerning the job you wish to bid and the way your expertise and capabilities qualify you to efficiently carry out it, the extra assured the surety can be in offering the bond. Moreover, your willingness to meet underwriting necessities will drastically enhance your likelihood of acquiring elevated surety help.

Outdated Republic Surety Firm prides itself on taking a consultative strategy with contractors which might be prepared to observe the wanted steps to extend their bonding capability. We will give you the recommendation you want to take your bonding program to the following stage. Contact your bond agent for extra info, or contact us so we will join you with one of the best bond producers within the enterprise.

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