Businesses dealing in high-valued projects often turn to a bonding agency for bonds as a form of security cover in the occurrence of undesirable results. A surety bond is a financial arrangement between three parties: a principal, an obligee, and a surety, where the surety company acts as a guarantor, promising to pay the obligee in the event of the principal’s failure to fulfill obligations. To take advantage of this protection mechanism, business parties have to go through an application process, for which a bonding agency requires a number of pieces of information. This article will list what information an agency needs for an application and why.

Personal and Business Details

One of the types of details you will be required to share in a surety bond application is related to your business. It helps the bonding agency like identify and verify the applicant’s identity and business structure, which is necessary to assess the applicant’s financial soundness and history.

Applicant’s Identification Proof: Full legal name, contact information, and social security number or employer identification number (EIN).

Business Structure: Information about the applicant’s business structure (e.g., sole ownership, corporation, LLC) and the date of establishment.

Ownership Structure: Insights regarding the proprietorship, including partners, investors, and their share percentages.

Financial Information

A strong financial position implies less risk for the bonding agency. Hence, a need to share financial statements like income and cash flow to judge the applicant’s financial stability, liquidity, and capacity to fulfill bond commitments. 

Income Statements and Balance Sheets: Provide insights into the applicant’s financial health, including income, expenses, assets, and liabilities.

Cash Flow Statements: Show the candidate’s capacity to manage cash flow and meet financial commitments.

Project or Contract Information

Next, information to share is about the project or agreement itself for which the bond is required. In case you are applying for a contract bond, help the bonding agency understand the project’s scope and contract value to evaluate the degree of risk involved in the bond. It is to be assured of the applicant’s financial capacity to complete the project as agreed.

Project Data: Description of the undertaking, area, extent of work, and estimated completion date.

Contract Value: The absolute worth of the contract for which the bond is required.

Client Information: Details about the client or obligee, including their identity and contact information.

Work History and Experience

The applicant’s work history and experience provide a chance to judge their financial as well as skill competency to effectively execute projects, which is fundamental to mitigate the risk of default on their part.

Résumé or CV: Outline of the applicant’s professional experience, capabilities, and relevant skills.

Project Portfolio: List of past projects completed, along with their details and results.

Credit History

The credit record gives an idea of the applicant’s financial habits, obligations, and discipline toward fulfilling obligations on time. A strong credit score proves their credibility.

Credit Report: Outline of the applicant’s financial record, including credit score, outstanding debts, and installment history.

References and Recommendations

References and recommendations provide a probably unbiased third-party validation of the applicant’s standing and capability, providing an extra layer of trust.

Professional References: Contacts who can vouch for the candidate’s personality, capacities, and working attitude.

Client Recommendations: Positive feedback from past clients.

Legal and Licensing Information

This information helps the bonding agency ensure that the applicant is working lawfully and morally. Litigation history can indicate potential risks.

Permits to operate: Details about the applicant’s licenses, grants, and accreditations required for their industry.

Litigation History: Information about any past or ongoing legal battles involving the applicant.