What are they?
A Surety Bond is a written undertaking from an S&P-rated financial institution, provided in place of cash or a bank guarantee as security for the performance of a contract.
They can be used instead of a bank facility or alongside one to increase capital availability. All in costs can be comparable to bank arrangements but on an unsecured basis.
What is the difference between surety bonds and bank guarantees?
Fairly simple, surety bonds are issued by insurance companies and bank guarantees are issued by banks. Both are unconditional, on-demand guarantees so each achieve the same result and are widely accepted.
Who can qualify for Surety Bond facilities?
Ideally, a business that has been profitable for the last three financial years, with revenues in excess of $15,000,000 is the minimum entry criteria. Also looking for:
- Tangible Net Worth in excess of $1,000,000.
- Requiring a total facility in excess of $1,000,000.
- Proven ongoing usage.
Why use Surety Bonds?
Unlike a bank, insurer surety providers do not require security over the company’s assets and do not require bonds to be supported by cash or other collateral. This allows a contractor to free up funds, reduce debt, and tender for more contracts.
Surety bonds can also represent a comparable alternative to bank guarantees with low base rates and no line fees.
We optimize the use of surety facilities to improve the financial flexibility and profitability of your business.
- Bonds are interchangeable with bank guarantees.
- Insurers do not require security over your assets or cash collateralisation.
- No line fees and base rates can be similar to bank rates.
What types of Surety Bonds can we arrange?
There is a wide range of bond types available, some of these are:
Contract Bonds available from a wider facility arrangement:
- Performance Bonds.
- Retention/Maintenance Bonds.
- Advance Payment Bonds.
- Bid Bonds.
- Off-Site Material Bonds.
Commercial and other Bonds:
- Workers Compensation Bonds (Self-Insured Programmes).
- Mining Rehabilitation Bonds.
- Deposit Bonds.
- Supplier Letter of Credit Guarantees.
- Commercial Rent Bonds (New to Market).
Bank fronting is available for most bond types.