Performance Bond Qualification?

TierraTurf

Just started my own company. I am a Certified GC for State of Florida. I have a project coming up that requires a 500,000 performancwe bond and 5% bid bond. Because my company is new and I can't pull the bond, can I have a outside individual or company pull the bond on my behalf.

cleveman

I don't think they can pull it on your behalf. But you could be a subcontractor. I guess they could pull it on your behalf, but they would be fools because they would still carry all the performance liability for you.

Are you sure they won't bond you? What reason did they give?

jamestrd

up tp 400k should be simple,,, after that, the application is a little more involved...all based on personal and business credit...just call a few bond outfits and they will walk you through it.. you can google local co's..

it really isint hard to get at all..phone call will do it.

Astrix

I find that being a new contracting business trying to get your first bond is like being a young adult trying to get your first car loan. Because you don’t have a credit (or bonding) history, the only way to get it is if you pretty much have the money in the bank already. But then, of course, if you have the money in the bank why do you need to get the loan or bond? At best, you might be able to get the bond by showing you have at least 50% value in collateral. That money will be tied up, but at least it’s only 50% tied up and not the full amount. I’ve seen new owners put up a line of credit and even their personal homes including not only their own assets but their wives’ assets as well in order to come up with enough collateral for their first bond. But after that it gets easier because now you have started to develop a bonding history.

A lot will depend on your prior work history. Have you already done any jobs (without bonding) and can you show that you came in on time and within budget? These would have to be jobs that you ran totally on your own; not as a foreman or manager for a prior employer.

You mentioned that you can't get the bond. Did you only try one brokerage? Alot of brokerages don't want to bother with setting up a bonding facility for a new company because it involves more work to convince a surety company to take you on.

It is possible to have another contractor who already has a bonding facility to front the bond for you – but that is like getting someone to co-sign your loan for you. By fronting the bond for you, that other contractor takes on full responsibility if you default on the job and they could lose their preferred bond rates or even their bonding facility. Therefore, I don’t think there will be a lot of contracting businesses willing to do that unless it is family or a very good and trusting friend. Also, you might get the bonding that way, but you won’t get the same rates that your “friend” has; they will definitely load an extra charge.

rbsremodeling

Yes you can. It can be an individual also does not have to be a company.

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Carport King

I have gotten around bonding for jobs by not having your money in front of the work performed.

It's tuff in Florida right now for new contractors to get a bond period.

You need to sit down with your clients and try to work out a different deal unless it's a state or gov job then you must be bonded.

I have worked around it 6 times in the last year. But again it's the comfort zone about the money for both parties involved.

Good luck

Bob Kovacs

Stupid question, but if your company is new and unable to bond, why would you think that anyone in their right mind would be willing to post a bond for you, even if it was permitted???

SDG

check out Bonds Only Inc. from Jacksonville FL

I used them for a 200K job, and there is an express package (new co.'s) and the standard package.
Express costs a little more ~3.8%

John_B

I'm assuming this is a public project. I have never worked in Florida, and from your post I can see that the standards are a bit different than other states.

In most cases, you will be required to post a 10% bid bond, which can either be a cashiers check, or a surety bond. The latter is most preferable.

Smaller bonds are often issued simply with a credit check for those who do not already work alongside a surety that has your firm's financial data. Bond rates are typically anywhere from .5% on larger projects, to 2.5% on smaller projects, so on a $100,000, $2,500 is not a substantial enough income nor is the risk substantial enough to review statements prepared by a CPA, and therefore a simple credit check is the preferred method.

Surety bonds going into the millions will require requesting companies to generate corporate financial statements as well as personal financial statements including those of the corporate officers at a minimum bi-annually and retain at minimum 10% of ongoing and potential (requested bid/perf. bonds) revenues as working capital.

In order for another person to qualify a bond for your company, the individual must also qualify the company as a partner or officer.