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How to Qualify for a Performance Surety Bond

March 5, 2019

Surety bond underwriters don’t get any special pleasure in saying “no.”

Construction surety bond underwriters don’t get any pleasure in saying “no.” Here are three things you need to be sure you've nailed down to get a “yes.”
CCIG’s Tom Patton.

Hard to believe, right? But the fact of the matter is that surety companies are in the business of issuing bonds, not denying them.

So why do you keep getting the cold shoulder?

The list of possibilities will, of course, be unique to you and your company’s history. But here are three things that any contractor needs to be sure they’ve nailed down if they expect to get a “yes.”

  1. Get your financial statements in order.

A sure-fire way to get denied is to turn over financial statements that are incomplete, inaccurate or worse. You don’t necessarily need to have a CPA sign off on your financials but it sure does help. A professionally prepared set of financial statements gives underwriters comfort that yours is a more sophisticated operation that understands how to play with the big boys/girls.

  1. Don’t overextend.

Let’s assume you’ve been in business a while, have a solid track record and have been growing. A big job comes up and you want it! So you pour everything into preparing a bid, including hiring that CPA to help, but, despite your supreme readiness, get shut out. What happened? Well, part of the bond application review involves comparing the size and scope of the proposed project with projects that you’ve completed in the past. In other words, bidding on jobs that are significantly larger in complexity, outside of your area of specialty or physically far from your typical operating area is not going to help. You’ll be viewed as over-extending yourself and should expect to get declined. So, what’s the best way to resolve this? Take smaller steps on your growth path and be patient. You’ll get there eventually.

  1. Give the surety better lead time.

If you’ve secured a bond before, this is less of an issue. But for contractors who are looking for bonding for the first time, be sure you’ve given yourself – and the underwriter – time. They’ll use that time to explore your work and credit history, dig into the contract and analyze your financial statements. In other words, there’s a lot of scrutiny required that doesn’t happen overnight.

Tom Patton is a Surety and Insurance Advisor with CCIG. Reach him at or 720-330-7922.

CCIG is a Denver-area insurance and bond brokerage with the full-service capabilities of a national brokerage. We do more than make sure you have the right policy. We also help you manage your long-term cost of insurance with our risk and claims management expertise and a commitment to service excellence.

Also read9 Warning Signs that Sureties Watch For

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