Bond Programs

Where most surety agencies focus on the bricks and mortar construction contractor, South Coast Surety has established special surety relationships with surety companies that prefer writing for the service and supply type contractor.

Service and Supply Contract Surety Bonds provide financial security for non-construction contracts by assuring the owner (obligee) that the contractor (principal) will perform the work and pay certain subcontractors, laborers, and material suppliers.

Service Contract Bonds include:

Bid bonds, which provide financial assurance that the bid has been submitted in good faith, and that the contractor intends to enter into the contract at the price bid and provide the required performance and payment bonds.

Performance bonds, which protect the owner from financial loss should the contractor fail to perform the contract in accordance with its terms and conditions.

Payment bonds, which guarantee that the contractor will pay certain subcontractors, laborers, and material suppliers that, are associated with the project.

Service Contract Surety is Relationship Driven

Most surety companies issue service bonds through surety bond producers. The first step toward establishing surety credit is to contact a professional surety bond producer who:

* Understands the intricate process of surety bonding and the unique underwriting standards and practices of individual surety companies;

* Matches the needs of the contractor with the surety company that is best suited to service those needs;

* Guides the contractor through the bonding process and assists in managing the contractor’s surety capacity;

* Creates and nurtures a successful relationship between the contractor and the surety company;

* Provides introduction to qualified accountants, bankers, and lawyers who understand the construction business;

* Offers sound business advice, management consulting, and technical expertise to help the contractor maintain growth and profitability.

As with all contract bonds, Service Contract Bonds are underwritten with a full submission of a questionnaire, financial statements, etc. The ability to attain Service Contract Bonds is slightly less cumbersome and easier than the standard construction bond.

South Coast Surety is an expert is placing Service Contract Bonds, with decades of experience covering a wide spectrum of businesses.

To get the very best program available, we need:

Completed "Supply/Service Contractor Questionnaire"

Last three (3) CPA prepared, company year end financial statements*

Personal financial statements of the business owner (s)

Bank letter verifying balances and credit arrangements

Resumes on owners and key personnel

Most Surety Companies are looking to support firms that have a well established history of successfully completeing the size and scope of work they are being asked to bond. To determine the amount of surety support (single bond size and aggregate cost to complete limits) the surety will analyse the presented financial information.

Most Surety Markets are going to require CPA prepared business financial statements. The size of the business as well as the size of the jobs that will need performace and payment bond support will determine the level of presentation required by the surety.

For firms looking to do bonded work under $500k with around $1.5 to $2 mil. in outstanding aggregate, many surety companies will accept fully scheduled compilation statements. All sureties prefer that the revenue be recognized on a percentage completion basis.

For firms doing larger jobs, with annual revenues up to $10 mil. to $15 mil. most surety markets are going to require that the CPA prepare the financial staements on a reviewed basis. When you get much larger, the surety underwriters may require audited statements.

To help understand the form and format the surety underwriters would prefer to see the CPA prepare the contractors financial statements, we have an example available here:

Example of CPA reviewed financial statement