Advice on PERFORMANCE BONDS???

[dholladay]

I am in the process of trying to get a performance bond for my company. Apparantly they are extremely hard to get. Does anyone know just exactly what it takes to get it approved? Does the performance bond have to be in the company name? I know someone that has one but does not have commercial license,would that work if we partnered???

[DeltaT]

Your business insurance broker should easily help you with this.

[flange]

If your financial house is inorder, it should be a slam dunk to get one, although you may not get the amount that you want right away. It is kinda like a credit card in that you have to build your bonding capacity over time. Shouldnt cost a whole lot either.

[dholladay]

So basically it is based on assets?

[flange]

not really it is based upon past performance. Just as your limit goes up when you use credit cards, so does your bonding capacity as you use it over time. Als your rating should go down as well so it should cost you a bit less in a few years than it would now. You cannot get a five million dollar bond if you've only ever done four hundred thou in work, etc.

[TAC Service]

The amount of the performance or completion bond is based on assets. The bonding company needs something that can be converted to liquid if you fail to perform and they have to hire someone to finish the project. For most small contractors the equity you have in property such as your house is the most common. Your past performance and project experience will get you approved but the amount of the bond is based on company and personal assets. The cost of the bond is about 2% to 3% of the total contract price.