Getting a leg up on the competition: A question frequently seen from small businesses is how to increase the company's bonding capacity. What they want to do is to move up the ladder from small jobs to larger jobs that can help them cover overhead. Unfortunately, there is no “easy” answer, but there are answers.
Pre Qualification and Bonding Capacity: A company becoming bondable is similar to the process of obtaining bank credit. Setting up initial bonding with a surety agent may take a few weeks. Pre-qualifying means knowing what the company's bonding capacity will be before bidding or negotiating. Finding the right surety bond agent or broker is critical in determining a business’s bonding capacity. They can determine the single contract limit and total aggregate capacity - bonded and unbonded. Read full article here
Some of the ways that Swiftbonds helps clients to show how to attain additional bonding capacity. First, try and keep capital in the business. Many business owners try and remove all of the equity from the business as soon as possible. Instead of doing that, be sure to leave cash in the business. Second, don’t overinvest in capital equipment. Most sureties discount the capital equipment as available to repay the surety. Instead of overinvesting in equipment, it is many times better to rent equipment and show additional capital on the balance sheet. Third, the financial presentation is critical. Swiftbonds works with business owners to get a good presentation, such as working with a CPA that knows how to present for sureties. There are a lot of sureties that say they know construction and how to present financials, but there are only a few that really know how to get that done. Fourth, get a line of credit if possible. A line of credit will help out strongly with the cash flow of the business. Cash flow is king in business and it’s good to make sure that this isn’t limited. A line of credit will really help in this area.
Swiftbonds is a company that focuses on surety bonds. They do bid bonds, performance bonds, payment bonds and other contract bonds. They also have an extensive state commercial bond program. Find them at Swiftbonds.com.
For more information, please contact:
VP Commercial Bonds
SOURCE: Press Advantage [Link]
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