August 12, 2022

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Surety Program: How it Can Guarantee an Individual or a Company?

Contract of Guarantee : A complete Analysis and Overview

For every agreement that people made there should always be a  proof to protect the interest of both parties. Especially when it deals with money, securing it can be a wise move when making a deal.  Just like in insurance contracts and policies are made as written proof that policyholders have availed, have agreed and are to claim the policy written on the contract. One of the insurances is the surety program. 

What is a Surety Bond?

A surety bond is an insurance that guarantees the performance of an act. For instance if two parties agree to something, one of them can get a surety bond to guarantee that the other party will fulfill their agreements made on their contracts. More like validating the contract that is done by both parties. Contracts are actually agreements but there is a tendency that contracts are not followed, therefore getting a  surety bond guarantees that the contract will be followed. 

How to Qualify for a Surety Bond

Guidelines in qualifying clients varies differently depending on the nature of business and other factors such as:

Financial Stability

The financial stability of the client is checked, so they will know how the company operates or basically how the company earns profit. Financial statements should be provided, made by a certified public accountant if possible. Credit history will also be evaluated and your bank accounts should also be of good standing. And the final piece will be your capital assets that can determine your worth. 

Reputation 

Company’s reputation can be a reflection of their ratings on how satisfactory they handle their clients and dealings. Customers, suppliers and employees are the main people who can tell how the company is doing and how they are being treated can determine the integrity of the  company.  Management and record keeping will be checked to know the history of your issues or concerns with your management and customers. If they can see that your company is organized then you can be qualified for a surety bond. 

Longevity 

The longevity of a company can be proof that business is good.  Apart from this they will also be checking on how long your employees are working for you? Are you in a good relationship with them? As they say “good companies can keep employees to stay for them for a long time”. Another thing they would check will be your business plans. They want to know what your company is looking forward to. Like are you planning to expand? Or are you up to something better for your company? If you can assure that your company will still be standing even if you die then they can give the surety bond you are applying for. 

Capacity 

The capability of a company to earn profit is important. Your capacity to keep the business running will  be evaluated by the surety bond company, so they can determine if you deserve to be approved or not. A smooth growth is better than having an up and down scale on your sales of production. Gradual increase in your sales can be a good design that your company is indeed growing and earning.

How to File a Surety Bond

Know What you Need

Before filing for a surety bond, you have to determine why and what surety bond do you need?  You can opt to check several surety bond companies on the list of policies they offer and read them thoroughly so you can choose which one fits you. 

Prepare the Requirements Needed 

Surety bond requirements vary among companies, make sure to get the list and be able to prepare all the needed documents as well as information you think are relevant on your application. Your licenses and certificates are important documents that are usually needed for surety bond application. 

Choosing your Surety Bond Provider 

Look into details of policies and prices, compare several if you need to. The Lowest price with a good offer will be the best. Make sure it contains all the things you need. Checking online can be helpful to compare several companies, you can also see feedback that can help you decide which one fits you best.  

Surety program can be a good thing to avail to guarantee your contract with your dealings. Get one now and feel secured.