handled as a line of insurance, surety bonds have many features
similar to ordinary credit obligations, because the bonding company's
financial worth guarantees your performance or payment obligation
for whatever is the subject of the bond. Underwriters generally
look first at much the same references on an applicant as would
be reviewed by any grantor of credit.
underwriters typically look into an applicant's:
as it relates to the project to be bonded
& personnel as they relate to the project to be bonded
will want to see complete documentation detailing your project or
requirement, including details from the party who requires the bond,
an actual copy of the bond language, a completed application, and
your credit information, including recent financial statements.
anyone lacking sufficient qualifications, underwriters may demand
collateral to be placed under their control, in much the same manner
as ordinary lenders. Collateral is then held until all obligations
guaranteed under the bond are satisfied.
final requirement by underwriters for any surety bond prior to issue
is a signed indemnity in which the applicant guarantees reimbursement
to the surety for any sums paid out under the bond. (Surety theory
being that bonds ideally would never pay any unreimbursed claims.)
addition to performance and payment bonds, there are endless varieties
of license, permit, judicial/legal and other highly specialized
bonds, each of which guarantees adherence to specific regulations