Getting bonded” is a term that is often misused in connection with obtaining different bonds, as the general public and even many business owners often do not understand the purpose of bonds. The term “get bonded” usually refers to license bonds or fidelity bonds. The bond needed will vary by:
Who is requiring the bond
Or perhaps you recently found out that a surety bond is required for your business, but have never gone through the process before, what will you need to become bonded? Well let us assure you the process is fairly simple. Much of the process depends on the type of bond you need. Below are the key components of your surety bond application:
Company Information: You will be required to provide the information that will actually appear on the bond, this is usually your businesses name (principal on the bond) and address as it appears on your license and or on the contract. Make sure this information is consistent with what appears on your Articles of Incorporation and filings listed with your state of incorporation.
Personal Information: As owner of the company, you will be required to provide your address, birthday and social security number; if married, your spouse´s information will also be required. This information is typically required for every owner that owns greater then 10% of the company. Bonding Companies typically don’t like to bond companies that their owners won’t stand behind.
Obligee Information: The next piece of information that you will need to provide is that of the entity that is requiring you to get the bond, otherwise known as the Obligee. This information will include the name and address of obligee (for most clients this is the local or state government), the type of bond they are requiring you to have (the line of business you are in), and the amount the bond must be for.
Financial Information: In many cases, owners with a greater then 10% stake in the company will typically be required to submit a personal financial statement. In addition , business financials are usually required as well. For business financials, CPA prepared is preferred, but other forms will be accepted.
Credit: It is important to understand that your credit report will play into what rate you are approved at. Though “high-risk” markets are available, this market carries a higher premium. It is always a good idea to know what is on your credit report, make sure it is correct, and to make every effort to get rid of any public records or negative information that may appear.
Bond Form: The bond form is the legal document provided by the obligee that contains the requirements of the bond.
The above covers what is typically required of a bond applicant. Having this information prepared and organized will help you in getting bonded easier. Depending on the situation or obligation, sometimes additional information and clarification will be required. Addition Information on How to Become Bonded