Secrets of Bonding 148: The Greatest Impediment to Bonding

Secrets of Bonding 148 The Greatest Impediment to Bonding

It is challenging to obtain surety bonds. Contractors and their agents are well aware that underwriters tend to be conservative. They ask a lot. They ask more questions. They then tell you that they are unable to help. It’s an enjoyable process.

Contractors with poor credit histories are not eligible for bonding. Some contractors have insufficient or weak financial statements. There are many reasons why an unhappy ending can occur, but which one is the most important? And what can you do to fix it?

Crappy credit is widespread. A company might not be getting enough work and have a poor credit rating. They decide to go into public service in order to make more money, but their poor credit rating makes it impossible. Sometimes, the report can be improved through corrections and updating of information. Contractors and their agents don’t have to worry about this.

Vague or weak financial statements: There are many potential problems. There is no financial statement, just an internal one, and there is no compilation. The pitfalls are endless. However, it’s not the most significant obstacle.

Unsavoury situations: Excessive bid spreads and bad prior experience. These are all bad, but not the king.

The Greatest Impediment

Imagine how it all begins. A list of information is required when the contractor decides to bond. The underwriter will need personal and business financial statements. It is necessary to have a current work in progress schedule. You will need to have your bank reference letter, prior tax returns, and resumes of key individuals.

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A contractor wants to pursue this. But MAN!

So he doesn’t have to produce company financial statements. How did he come up with them?

The owner of the company never had to create a resume. He was always self-employed. How do you write it?

The WIP schedule: This information is not available. I know exactly where I stand on each of my jobs. Why should I bother filling out so many forms?

I can complete the bank reference letter and make copies of prior tax returns. (They want the WHOLE THING?) If I do that, then who will do the estimation, so we don’t run out? Or everything will stop. Workers want to make every job their last. If I give them the opportunity, they’ll take all the profits.


The applicant is the greatest obstacle! My 40+ years of experience in surety bond underwriting has taught me that most contractors are entitled to be bonded. However, the majority fails to obtain surety support. They stop trying or don’t really try. People have to make choices. They must put food on the table. They can only succeed doing what they are good at, so why risk trying something that might not work? Sometimes, it is just easier to do the same thing over and over again, even if you’re unhappy.

We have observed that bonding requires patience and perseverance. It’s a journey with unexpected twists and turns. We have solutions, even though there may be challenges. Contractors and agents who expect it to be quick and easy may be disappointed.

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Bonding applicants must be willing to put in the effort to reach a goal that they believe is worthwhile. A surety backing your efforts is a big deal. They will vouch for your abilities and put up their own money to support it. It is a huge deal, not always easy, but it is always worth it in the end.

Steve Golia has extensive experience providing bid and performance bonds to contractors. He has been solving bond problems for contractors for over 30 years and helping them succeed when others have failed.

Bonding Pros has the market access and underwriting talent you need. All this is complemented by exceptional service and easy access.