When contractors want to pursue public works contracts (city, state and federal projects) they must gather a bondy of information and assets. The information includes many elements of the company's history and
capabilities, plus the personal resumes of it's key staffmembers.
Amoung the required assets is the ability of the company to file a surety bond for each contract.
Bond underwriters intend to make a broad review of the applicant's qualifications. This includes many aspects: Financial condition, technical expertise and prior experience, staff, equipment, banking and supplier relations, affiliates, legal issues and more.
Underwriters will avoid an account if there is a suspicion they are being manipulated. Underwriting questions are designed to reveal the applicants strengths AND weaknesses.
Certain aspects of the underwriting information are obtained from independent third parties such as CPA prepared financial statements, banking records, credit reports and supplier references. Other items may come directly from the applicant who is not independent but rather an "interested party." This is a fact of life in the development of every bonding file. Therefore, the underwriter must rely on the applicant to be honest and forthright with the information. Without this certainty, there can be no underwriting relationship.
To foster this good rapport, the applicant can take these steps:
1. Answer questionnaires and forms completely and honestly. Sign and date the document. If there are negative items, describe them candidly but attach a written explanation or other documents that may help.
2. Be sure to include other owned companies, all lawsuits, and bankruptcies even if old. If there are banking or tax issues, describe them. The underwriters will probably unearth these during the process, and it looks better if you volunteer the facts and then take the opportunity to give your explanations.
3. Describe the strengths of the company such as bonus & employment agreements with key people. Include their resumes. Describe any special training, licensing and certifications, awards, and provide good guy letters.
Keep in mind that sureties make money by writing bonds. So even if it doesn't always seem the case, they do have motivation to say yes.
Remember that, in effect, you are asking the surety to become your business partner. The surety will succeed on the project if you do. So how will you treat your new partner? Be candid and forthright! Don't try to hide the negative factors - you probably won't succeed, but you will do irreparable harm to the relationship.
Steve Golia is an experienced provider of bid and performance bonds for contractors. For more than 30 years he has specialized in solving bond problems for contractors, and helping them when others failed.
Steve Golia brings underwriting talent and market access to his clients. This is coupled with spectacular service and great accessibility.
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