- Working Capital?
- Net Worth?
What is the SINGLE most important element that underwriters consider when reviewing a bond account?
What is the ONE most relevant factor applicants must have in order to qualify for surety bonds?
Each of the financial factors is important. It’s like how much gas you have in the tank. Low or no NQ or NW means you may not go far.
Profitability is how well the engine is running. Hear a funny noise? That could be a bad sign. These are all important, but they are not the ONE most critical factor.
If you were the underwriter, if you were betting your own money, would you rather back an applicant with lots of dough or one that was absolutely trustworthy? Think of it this way:
Billy shows a strong financial position, but has a history of tax liens.
Suzie has limited financial recourses, but her credit score is high.
Who do you go with? I would lean toward Suzie. Billy has the big bucks, but how do we know he’ll do the right thing with his $. Will he pay his invoices properly and avoid bond claims? Stay out of trouble with the tax collector? Do the right thing by us? Maybe he got his money by dealing dirty…
Suzie on the other hand can be trusted. She may qualify for assistance or support. Given the chance, this honorable person may succeed.
So, you could argue that the one most important element is the CREDIT REPORT. It is objective, current, third-party info that reveals the applicants character. It helps the underwriter identify trustworthy applicants, people who honor their obligations.
Without that, you have nothing.
FIA Surety is a carrier that provides A rated, T-listed bonds in all states!
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