Running a construction business means that you depend upon your ability to get bonds if you want to do work for the government or large companies. Getting approved for construction bonds is about more than your credit history. Here are three other characteristics that matter when getting a construction bond:
#1 Your Financial Stability
It is not just about your credit history when it comes to getting approved for construction bonds. It is also about how your business is doing right now.
When you apply for a construction bond, they are going to want to see how you manage your cash flow. You are going to need to have a positive cash flow if you want to improve your chances of approval. You also need to have a nice base of working capital. Being in a good financial situation, with your money and cash flow well managed, will help you secure the bonds you need.
Be prepared to share detailed information about your financial situation. You are going to want to get your accountant on board to help you with this part of the process.
#2 Your Resources & Experience
Next, insurance companies that approve bonds want to make sure that not only do you have the cash flow to get the job done, but that you also have the resources and experience to get the job done as well. This is just as important as having the cash flow.
You are going to need to create a list of all the equipment that you own or that you have access to rent. This will show the insurance company that you have the equipment to get the job done.
You are also going to want to create a document that outlines all of the experience and training that your entire crew has. You are going to want to have a list of past projects that you completed along with details of the work that you did on each project. It is a good idea to also get references from past projects as well.
You are also going to want to create a document that shows all of the training your crew has. For example, if someone has a license to operate a crane or special training in window insulation, you'll want to document all that training. Be sure to also document all safety training that your crew has as well.
When applying for a bond, you want to have all of your finances in order and you need to be able to demonstrate and prove that your crew has the experience and equipment to get the job done as well.