How to Obtain a $10,000 Surety Bond
A $10,000 surety bond is often required to engage in commercial activity. The bond may be required under a contract to guarantee your performance, i.e., if you fail to complete the contract, the bond is used to compensate the other party. The surety bond may also be required by law for obtaining a license from a governmental agency. In this situation, the bond will be used to cover losses due to your failure to comply with the licensing law. Therefore, to obtain a surety bond, you must demonstrate to the surety company that you have good character and sound finances.
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Things You'll Need
- Business plan
- Company organizational chart
- Audited financial statements
- Letters of recommendation
Instructions
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Locate a surety company that provides the specific type of bond that you require. For example, if you need a broker surety bond, there are three types: insurance, mortgage and freight. Some surety companies may provide all three and others may specialize in just one type. There are a number of good informational websites on surety bonds that can assist you finding a qualified company for your bond requirements.
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Submit an application to the surety company to start the company's pre-qualification review, which the surety will perform in order to determine whether you are meeting your current obligations and can fulfill future obligations. Every surety company will have its own application requirements, but generally you should be prepared to provide information to complete a background check on you for public record information, such as judgments, tax liens and criminal convictions.
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Provide the surety company with information regarding your company's history, its current structure and future plans. This information can be provided as an organizational chart that specifies the important employees; a business plan describing your company's growth prospects and goals; and a business-continuation plan showing how your company will operate if you become disabled. Also provide a history of significant completed project and letters of recommendation from associates in your industry.
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Submit audited financial statements to the surety company for the last three years that have been prepared by an independent certified public accountant.
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Tips & Warnings
All surety companies will expect you to sign an indemnity agreement to protect the surety against a loss resulting from any claim made against your bond.
If you do not qualify for a bond, find out if the company or agency requiring the bond will accept a trust fund maintained with a reputable bank or other financial institution for $10,000 as an alternative to the bond. As an example, the Federal Motor Carrier Safety Administration, which mandates that every freight transportation property broker obtain a $10,000 surety bond, will accept a $10,000 trust fund in lieu of the bond.
