Are you a small business owner that has a project that needs to be completed but you want to make sure that your interests are protected? A surety bond may be what you are looking for. This is a type of contract that ensures a project will be completed even if the contractor defaults. Surety bonds are guaranteed by the Small Business Administration, but the actual bonds themselves are issued through surety companies or agencies. But how does a surety bond work, and more importantly, what is involved in obtaining one?
Types of Surety Bonds
There are four main types of surety bonds. These are:
Parties in a Surety Bond
There are three main parties involved in a surety bond. These parties are:
Role of the Small Business Administration
The Small Business Administration is responsible for guaranteeing any surety bond that is issued by an approved surety company. These bonds are guaranteed for up to $6.5 million; however, federal contracts can be guaranteed for up to $10 million if necessary. The Small Business Administration works directly with surety companies and charges a fee to the small business in the event of a payment or performance bond. A fee is also charged to the surety company based on how much the company charges the small business.
When a Surety Bond is Required
A federal construction contract that has a value of at least $150,000 will require a surety bond. State and municipal governments can also require a surety bond, but the requirements will vary based on state laws.
If you are concerned about a project being completed or want to make sure to protect your interests, contact a surety company in your area like NFP, P & C, Inc. today. They can go over the different options for surety bonds that may be available and advise on what will be the best option for your project.Share
12 January 2015
Do you own a janitorial service, or are you looking for a great deal on the cleaning supplies you need for your business? Finding the right supplies at the best possible price can go a long way in reducing the overhead for your business. I have compiled a list of products that can be used for several purposes and a general pricing list that can help you budget for what you need. You will also find some useful tips that will help you keep your place of business looking and smelling great. Hopefully, you find the information to be helpful.