Obtaining a bond can be more difficult than it should be. You look for days, if not months, for a bonding agency that can assist you. Many bonding firms would not offer surety credit to you if you have Alt-A credit. To extend credit, most Surety Companies need a minimum credit score of 660. Since surety companies operate on a no-loss basis. That is, if a lawsuit is made against your contract, you must repay the surety. As a result, surety firms are wary of writing bonds for clients who are at a disadvantage financially. The majority of the time, the surety likes to see companies with a high credit rating as well as a secure and solid financial position. In the current state of the economy, it is more difficult for a company to secure its licence bond, as sureties would not bond a company that is losing money. Learn more by visiting Swiftbonds.
Since larger performance bonds carry the greatest risk, surety companies have been hesitant to write them. Contractors are unable to borrow money against their homes. It has made it more difficult for them to raise working capital in order to finance larger ventures.
Contractors have been the hardest hit. The Small Business Administration (SBA) has now extended its bonding services to help contractors meet their increasing needs. The Small Business Administration (SBA) is now requiring contractors to have higher bonding limits. Contracts that include performance and payment bonds will now handle larger federal projects. Many contractors have been relieved because surety bonding firms have been unable to write larger bonds.