Why You Need A Surety Bond When Taking Bids On A Business Construction Project
If you are in the process of planning a construction project for your business -- such as if you are having a new commercial property built -- chances are good that you will need a surety bond. Basically, surety bonds can be used for a few different things, like ensuring that the contractor will complete the project according to the bid. These are a few reasons why you need one.
Protect Yourself
First and foremost, you have to protect yourself when having a commercial building built. You want to ensure that the job is done correctly and in a timely manner, since you probably have a lot at stake. Your investors and others who are involved in your business are probably counting on the job being completed as promised, and you could run into issues if this does not happen. Plus, you could lose a lot of money if the project is not completed as it should be or if it takes longer for the construction job to be completed than expected. Having a surety bond in place helps protect you from these potential issues.
Work With the Best Contractors
Although some fly-by-night companies might be looking to bid and work on projects without a surety bond in place, the best, most experienced and most reputable contractors typically have a solid understanding of surety bonds and have no problem with them. By requiring for a surety bond to be put in place, you can ensure that you work with the best contractors. This can help ensure that your project is done the right way and that you are working with a company that will do a good job on the building itself.
Abide by Local and Federal Laws
Did you know that federal, state and local laws can actually require a surety bond? According to the Small Business Administration, any federal construction contract that is valued at $150,000 or more must involve a surety bond, and there are other local laws that have even stricter requirements. If you want for yourself and your contractor to be in compliance with all of these laws, you need a surety bond.
Satisfy Your Lender and Insurance Company
Depending on the project, there is a good chance that your lender and your insurance company will both require you to have a surety bond in place for your project. By having one, you can avoid any problems with your bank or insurer.
As you can see, a surety bond is a necessity with many business construction projects. To obtain a surety bond, contact a company like NFP, P & C, Inc.
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