If you’re starting a small business, you might come across the need for a surety bond. Being bonded can protect your business from financial losses or be required by contracts. Alpha Surety Bonds can help you get bonded and ensure you meet all necessary requirements.
How to Apply for a Surety Bond
Surety bonds are provided by licensed agents. Look for a company that specializes in bonds, not just insurance. You’ll need to fill out an application with personal details, including your credit score. If you have bad credit, some agencies offer high-risk programs to help you get bonded. Your credit history and the type of bond you need will determine if you’re approved and how much it will cost. Some bonds require additional paperwork, such as business financial statements or personal asset details, to evaluate your risk level.
How Much Does a Surety Bond Cost?
Unlike insurance, surety bond costs vary based on your risk level. The underwriter will assess your likelihood of triggering claims and set your bond rate accordingly. Since bonds work like credit rather than insurance, prices are not standardized. To get the best deal, request quotes from licensed agencies. The bond cost is typically a percentage of the total amount, ranging from 1% to 15% depending on your financial history. Keeping a strong credit score and providing additional financial proof can help lower your premium.
Getting Licensed & Bonded
Some professions require a license bond to operate legally. Even if your job doesn’t require one, having insurance is a good idea. If your profession does need licensing, a surety bond might be part of your application. These rules depend on your state. Businesses needing license bonds include contractors, auto dealers, and freight brokers. Always check state regulations to ensure you meet all legal requirements before starting your business.
What Credit Score Is Required to Obtain a Surety Bond?
A surety company will check your credit to see how reliable you are in paying debts. A high credit score (above 670) makes it easier to get a bond at a lower cost. If your credit is below 670, you can still get bonded, but it may cost more. Having judgments, liens, or unpaid collections on your record can make the process more difficult. However, some agencies specialize in providing bonds for people with bad credit, though they may require additional financial documents to approve your application.
Work With a Bond Specialist
It’s best to work with an agency that specializes in surety bonds. Some companies offer bonds as a side service along with insurance, but a dedicated bond provider will better understand your needs. A good agency can help you figure out the type and size of bond required, guide you through the application, and ensure you provide the right documents. Additional paperwork may be requested during approval, but this is normal and doesn’t mean your application has issues. With the right guidance, you’ll get the bond you need efficiently.
