Four Tips to Strengthen Small Business Surety Bond Qualifications

Written by JoAnn Smith on July 24th, 2014. Posted in Commercial Bonds, Finance Bonds, Non-Construction Contract Performance Bonds, Payment Bonds, Performance Bonds, Surety Bond Blog

     small business surety bond      
Small business surety bonds are vital to local businesses like these.
While the economy has begun to show real signs of recovery from the 2008 crash, for many owners, small business surety bond qualification is still a tough nut to crack. The qualifications for many small business related surety bonds continue to be restrictive and to many business owners a bit behind the times. This is natural as a conservative business like surety bonds has a tendency to lag behind economic trends.
 
But that doesn’t mean that your small business can’t qualify for those important and business building surety bonds. Here are a few tips to help you understand why these small business surety bonds are so vital to your financial health and how to improve your chances at qualifying for them when the project or opportunity arises that require one.

Why Do I Need a Small Business Surety Bond?

For many small business owners the first question is why they want to try and qualify for any kind of small business surety bond such as a performance bond or a payment bond. As the economy recovers many city state and federal government projects are seeing new life and increased funding. These types of lucrative projects, whether it is as a contractor providing laborers for construction or a local provider for schools, will require a guarantee of your ability to deliver what you promise. In the case of a performance bond, it will guarantee that you will perform according to your contractual agreement on the project. When it is a payment bond, you are guaranteeing that subcontractors and suppliers that you bring in will be paid according to the contractual schedule. Since most if not all government project require these guarantees, if you want to be able to bid for this type of work, you will need to qualify for bid surety bonds, performance bonds and even payment bonds if you act as a contractor with subcontractors and suppliers. As the saying goes, any money you leave on the table isn’t yours when you head home, so why leave this growing and important sector to the competition?

Qualifying for that Surety Bond

Of course, the big hold up for many is simply qualifying for a surety bond if you have never done so before. For a brand new small business, surety bond qualification may seem beyond you, but it doesn’t have to be if you plan for it. The key is to work closely with your financial adviser and have these four items in mind as you prepare to qualify for a small business surety bond:
  • Working Capital – You must be able to demonstrate your ability to raise adequate capital for future projects. This means your current assets minus your liabilities must always be top of mind when planning.
  • Banking Relationships – Do you have a strong relationship with your bank? This is the kind of qualification that takes time to work on, and is worth the time you do spend. Talk to your financial adviser about the best way to approach this.
  • Strong Job History – Even if you are just starting out, you can point to the success of what has been done before. Work-in-progress that is timely and within budget, bid results that show your ability to keep your promise and how much work you have in the pipeline are all part of this equation.
  • Cash Flow- This one is vital since the majority of times a surety bond is called in to complete a project it will be because the bond holder has had a cash flow problem. Take a hard look at your own current cash flow situation and if it isn’t up to snuff, discuss with your financial adviser what you can do to change that.
Beyond these, keep in mind that simply having the money is not always enough to qualify for a surety bond for your small business. In addition you will want to gather together letters of recommendation from previous business partners and vendors, letters of credit and as much financial detail as possible. Finding a surety company that understands your business, such as BuySurety, can also be a big help. BuySurety has helped small businesses get bonded across the country since 1998. Working with an experienced surety bond company like BuySurety as well as bringing in your financial adviser to be part of your surety bond team can ensure that you not only qualify for that important surety bond but get the rate you need to make it a smart financial move.

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Massachusetts Foreign Money Transmitters – New Bonding Rules

Written by JoAnn Smith on December 6th, 2013. Posted in Commercial Bonds, Finance Bonds, Latest News, Legislation, License and Permit Bonds, Massachusetts, States, Surety Bond Blog

     money transmitter bond
Companies helping money leave the country must be bonded
Changes are being predicted for money transmitters who handle foreign currency in Massachusetts. While the bill has sat in legislature for the majority of the past year, many think that may change soon. As things stand today, any business that handles foreign deposits must post a surety bond that is equal to double the amount that an individual transmits each week. In addition, currently the minimum bond amount is $50,000. When the business has more than one location, then the bond amount currently must be either $50,000 or twice the weekly transmission value, whichever is greater. But this is all about to change.

Multiple Locations Taken Into Account

With passage of Massachusetts House Bill 876 the bond requirements for multiple locations will be changing. There will be an additional bond requirement of a $10,000 money transmitter bond for each additional location. A limitation of no more than a total of $450,000 in surety bonds will ensure there is a cap for the amount that is reasonable. There would be a five year tail on the bond and either the Commissioner can act or there can be direct action taken on the bond.

Money Transmitter Bonds Still Required

Whether this bill does go through or not this year, money transmitter bonds will continue to be required for any business that transmits money, domestic or foreign, in the state of Massachusetts. Not sure if your business is required to have a money transmitter bond as part of your licensing or not? Don’t worry, contact BuySurety and let us help you find out what you need to qualify for it today. We have informed helpful service operators ready to help you with all your surety bond needs. Just contact BuySurety, regardless of bad credit, new business or no credit. We can help keep your company stay compliant with the law.

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Commercial Surety Bond Legislature for Debt Management Services

Written by JoAnn Smith on November 26th, 2013. Posted in Commercial Bonds, Finance Bonds, Hawaii, Latest News, Legislation, License and Permit Bonds, Lousiana, Massachusetts, New York, Pennsylvania, Surety Bond Blog, Washington

Debt Management Services
Recent surety bond legislature for debt management service companies has been sweeping through several states. With the increased regulation of all banking services, it isn’t surprising that many states are looking more closely at this sub-set of the financial industry with a bit more scrutiny. Massachusetts and Pennsylvania have both passed new regulations regarding these services and a few other states have had similar bills defeated that will probably circle back around soon for another attempt at further regulation. For a closer look at all the changes regarding these industries, here are the details:

Massachusetts Surety Bond Changes

After sitting in the House for several months, House Bill 875 has finally been sent to the Senate Ways and Means committee as H3569. It looks likely to pass and will require all debt management service companies to post a surety bond as part of their licensing requirements. The amount of the bond will be determined at the time by the Commissioner of Banks.

Pennsylvania Debt Settlement Service Providers Bonding

In a bill that will see the posted bond run to the Commonwealth for its benefits, Pennsylvania has decided on a $25,000 credit services bond requirement. This will be part of the new licensing requirements for debt settlement service providers and will also oblige that the bond run for the length of the license. An additional $25,000 penal bond will also be required as part of the licensing procedure.

Growing Movement toward Surety Bonds

Although they were defeated in legislature, there were bills for the requirement of licensing and the posting of surety bonds for all debt management service providers in Hawaii, Louisiana, New York and Washington. This marks a definite trend towards the institution of surety bonds as a licensing requirement in this industry in the coming years.

Find All Your Surety Bonds Here

Many businesses that serve non-traditionally in the financial sector may find they will suddenly be required to post a surety bond in the coming years. If your business is considering the move to posting a surety bond as part of their licensing requirements, don’t get caught without them. We can supply any kind of surety bond for any industry in all fifty states. Contact our offices or visit our BuySurety website and find out just how easy it is to get the surety bond your industry requires, regardless of your credit rating or years in the industry.

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