How Surety Bonds Can Financially Benefit Your Business |
Posted: June 24, 2016 |
There’s no doubt about the fact that bonds play a very crucial role in one’s business. It financially protects the business and creates trust when it comes to dealing with promising clients. A surety bond is a contract between three parties - the principal (you), the surety (surety bond agent or company) and the obligee (the entity that requires the bond). The surety financially guarantees to an obligee that the principal will act in accordance with the terms as established by the bond. The principal has to fulfill the required obligations and they could mean adhering to state laws and regulations with regard to a specific business license or meeting the terms as mentioned in the construction contract. You may ask yourself “Why do I need a surety bond?” Know that any Federal construction project valued at $150,000 or more would require a surety bond when it comes to bidding or as a condition of contract award. Most state and municipal governments as well as private entities express their concern for similar requirements. These bonds are lawfully required by states or certain industries can keep a business owner safe from financial loss. There are more than 50,000 types of surety bonds in the United States, and each state has different laws as to which types of industries require them prior to acquiring a license. Do you own a construction company? Or, are you a real estate agent? Then the state you’re living in may legally require you to be bonded so you can run the business. The basic purpose of surety bond is to make sure you will accomplish the job you were hired to do. Even if your business is not bonded, you can benefit from purchasing various types of bonds. For example, you could be running a company in which your employees deal with customer’s money in a routine manner, what you can buy is an Employee Theft Bond. Not only will it protect you if any of your employees steals customer’s money, but using the words like “bonded” and “fully licensed” pertaining to your business, it will definitely create a high level of trustworthiness that potential customers might not have. When you apply for the bond, it’s necessary for you to provide your credit history, financial information, business volume, and personal information. You have to file an application with the surety bond agent or company and pay between 1 and 3 percent of the bond’s face value. Looking for the right surety bond for your business? Get in touch with a professional and reliable surety bond agent that can help you acquire the right type of surety bond you need for the business. There are many trusted agents dealing with various types of surety bonds online. These agents can give a boost to the client confidence by providing a bond in which there’s a contractual and financial guarantee that the project will be accomplished as required.
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