Contractors bidding on high-value construction projects are often required to qualify for surety bonds in Pennsylvania to win contracts. Prior to making an application, business owners frequently take the following steps to put them in a better position to qualify for a surety bond.
1. Manage Personal and Business Credit
Bond insurers typically review credit reports for the construction company and the owners. Prior to applying for a surety bond, owners can review credit reports and correct any inaccuracies. Because the owner is typically responsible for repaying the insurer if the surety bond is paid out, both personal and business credit history is normally scrutinized before the bond is issued.
2. Have Professionally Prepared Financial Statements
The strength of the contractor’s financial position often impacts whether the company qualifies for bonding. Many insurers require financial statements prepared by CPA’s. Audited financial statements potentially provide even greater assurance of the contractor’s overall strength and professionalism.
3. Build Relationships Early
Similar to building a relationship with a banker before needing to apply for a loan, it can be important to build relationships with issuers of surety bonds in Pennsylvania. Successfully finishing small, bonded projects gives insight to the issuer about the company’s operations and could build confidence that contractual obligations will be met when a larger opportunity arises.