#60: Capacity: 10 Magic Wands

Just like waving a Magic Wand over the company financial statement, here are ten strategic recommendations that can change everything from a bonding standpoint. They are a little more complicated than “Abracadabra!!!” but any one can be a game changer for contractors who need to qualify for bonds or increase their bonding capacity.

1. Pay back stockholder loan – Such “loans receivable by the company” are deducted from the Net Worth analysis. To avoid this detrimental effect, pay the loan back to the company.
2. Restructure debt – Convert short term debt to long term.
3. Add capital – Stockholders can add to the capital stock account at any time.
4. Add a corporate or individual indemnitor – Their financial position could be helpful if documented by presenting credible financial info.
5. Joint venture or teaming partner – Present their credentials, experience and financial info to the surety.
6. Update underwriters re FYE A/R collection – If old fiscal year-end receivables were collected, update the underwriter.
7. Provide collateral – Can be in the form of cash, an Irrevocable Letter of Credit or real estate (depending on the surety.)
8. Use joint checks – This is a relatively painless way of reducing the risk on the Payment Bond when applicants have some cash flow or credit weakness.
9. Bond subcontractors – Takes some risk off the Performance Bond
10. Use Funds Control – A professional Paymaster handles all the contract funds. Reduces the risk on the Payment Bond. And…
11. Bonus: Consider the SBA Bond Guarantee program

Think you can remember all these?

Good news: You don’t have to! We understand and utilize all these concepts and more to help our agent/colleagues serve their clients.

Get our FASTAPP for contract bonds up to $500,000 Click!

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

P.S. Check out our upcoming Free CE schedule here!

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