Can I get bonded?

I would like to start bidding small public works jobs that would require me to get bid, performance, and payment bonds. My problem is that I am a sole proprietor, and my house will soon be foreclosed on so my credit will be shot. I will almost certainly not qualify for bonds unless I pony up the cash to cover the entire bid amount. Does anyone know of any other options I might have to get bonded.

Palmer78 said:

I would like to start bidding small public works jobs that would require me to get bid, performance, and payment bonds. My problem is that I am a sole proprietor, and my house will soon be foreclosed on so my credit will be shot. I will almost certainly not qualify for bonds unless I pony up the cash to cover the entire bid amount. Does anyone know of any other options I might have to get bonded.

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Since CD rates are low you might get someone to cash bond it for you for a couple of percent if you know anyone with money that has any faith in you.

I don't mean nothing by this and I don't know nothing about your business but just going from what you have said, I would question your cash flow ability on a public project when you can't make your house payment. Just Sayin.

Around here a few guys have went broke getting rich working for the government. The Public's money doesn't flow as fast as private money most of the time. When you have to finish a job and still wait 6 months to a year to get paid it takes a lot of money to operate. I don't know if it's that way every where but that's the way it seems to work here.

Just something to think about before stepping off in this.

as far as getting bonded goes i dont know much about it and would like to hear what it takes as i am needing to get bonded on a few projects that i have very good opportunities on. anyone know anything?

do a web search for bonding companies in your field. all they are is insurance companies that make you put up a cash deposit, thencharge you a fee to say you are bonded. Or you can go to a Bank and do the same thing yourself.

Ask the insurer that is presently carrying your liability insurance, they prolly carry bonding abilities also.

Bonding, Bonding , Bonding is a pain in the a$$ and the economy has not helped. I used to use 7 bonding companys and shop for the best deal. Since allot of builders defaulted on projects in the last couple of years, the bonding companys have closed up shop. I have never defaulted on a bond or had a claim. I pay my bills and do good honest work. I have lost jobs this comming year and last year due to not being able to secure bonds fast enough. I dont have ten of thousands of dollars to set aside and self bond. I really dont know whats going to happen with bonding since its based on lending and no banks are lending no matter the credit or cash flow. Its going to be painfull for the next couple of years for sure.

sandnsnow said:

Bonding, Bonding , Bonding is a pain in the a$$ and the economy has not helped. I used to use 7 bonding companys and shop for the best deal. Since allot of builders defaulted on projects in the last couple of years, the bonding companys have closed up shop. I have never defaulted on a bond or had a claim. I pay my bills and do good honest work. I have lost jobs this comming year and last year due to not being able to secure bonds fast enough. I dont have ten of thousands of dollars to set aside and self bond. I really dont know whats going to happen with bonding since its based on lending and no banks are lending no matter the credit or cash flow. Its going to be painfull for the next couple of years for sure.

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I have been there too! I feel your pain

Palmer78 said:

I would like to start bidding small public works jobs that would require me to get bid, performance, and payment bonds. My problem is that I am a sole proprietor, and my house will soon be foreclosed on so my credit will be shot. I will almost certainly not qualify for bonds unless I pony up the cash to cover the entire bid amount. Does anyone know of any other options I might have to get bonded.

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with a soon to be foreclosure, it would be my guess your odds of getting a payment/performance bond are slim and none...i wish you well

I am going to agree with some of the other replys on here. I mean NO disrespect to you at all. Govt work is very dangerous! That is about 90% of what we do and it is very easy to get your hand stuck in the cookie jar. State, local, and feds traditionally pay very slow 90 days on average (depending on the agency). You HAVE to have readily available cash flow, whether in hard cash or a line of credit. A rule of thumb is 3 months of operating cost at all times. If there is any problems with pay request or your work your pay and or retainage can be held for up to a year or more. As a company you really have to be set up to do bonded work (financial statements, a proven experience record, references of size and scope of what you are bidding) a strong credit rating with Dunn and Bradstreet, this is a recent trend. Reguarding the bonding, these companies are on lock down right now. We have been in buisness for 60 years and have a hard time bonding work that is a few bucks over our credit limit (which in my opinion our limit is way too low) We have tried several times to increase it but in the economy were in now they just will not take any risks. I know times are tough and the govt is still spending money so i understand the appeal. My advise would be to try the credit score bonds (they are a one time bond based purely on credit) i believe Western Suritey is the big player. If that doesnt work i dont know what to say. Even if you put down the 5-10% at bid time you still have to come up with 100% if you get the job. That would put a damper on the check book! If there is a maintenence bond it has to be through a bonding company. Finacial statements and credit score are everything to these people (they dont care about assets). Only other thing is to bring in a friend or someone you can trust as a partner and run everything through their credit. Believe me i dont mean to discourage you in business. It just sounds to me like this may not be the best time to make this work. Best of luck and dont give up!

hey guys fairly new to operating and this again will make me sound dumb but can someone explain bonding to me? have never heard of it before and was just curious.

Thanks again

Steve

Bonding.

Hello.

Think of a bond as a sort of insurance.
You agree to do X at such a cost.
If you go broke, the bonding company will pay, or in some cases simply hire another GC.
But, there is more to it.
This first one is called a performance bond.
http://en.wikipedia.org/wiki/Performance_bond
Next is the liability bond, and as it implies, covers the liability you might incur.
The aggregate of all of this is called a surety bond.
http://en.wikipedia.org/wiki/Surety_bond
I have worked under more than one GC in this field when I was real active in construction, I am a disbarred lawyer who hates office work, prefers to work on the job.
You can call an attorney who does construction who may be able to help you, figure on around $2k to walk you through it.
But, once you have all your contracts written and bonds set up it is pretty much static from there on, just getting started is the hard part.
And, yes, if you are about to lose your house it is going to be a hard sell.

hey. thanks alot for clearing that up for me. this is an awesome forum. most time you go on a forum and ask questions and you get smart A$$ comments from so many people but everyone on here seems really eager to share info and can leave their ego's out of it.

Steve

I've done a little public work. Bonds are a necessary part of that market. Bonding is no problem if you're already rich. If you are foreclosing on your house, I'd say you have a zero to no chance of getting bonded. Basically a bond is a insurance policy assuring the Owner you're secure enough to do the project, both from a technical and financial perspective. You've already admitted there's financial problems.

Public construction projects are all about risk management. Nobody wants to take the risk. Lien releases, payment schedules, bonds, suretys, builder's risk,worker's comp. It's all just a viscious struggle with minimizing risk and maximizing profits. The entire project turns into a push-pull snatch and grab to see what you can get and hold onto.

I'd rather be hung upside down, and my toenails pulled out one at a time as to go back into public construction.

Bonding

I'm not sure what the fuss is about in reguards to bonding issues. I started my business in Jan of 07 and was able to get a bond for about $100,000 the first year thru I think it was CNA. Each bid bond did cost me about $100.00 then the performance bond was after that if awarded the project. Now I have been able to get a bond for $700,000. a year ago. I mostly do public work. As for payment sometimes it may take 45 days to get the first payment after your first pay request but after that 30 days is the norm here. The largest problem I have with the public work is that most of the work they want to replace curbs street and put in a lot of paving so a lot of the public works projects now get to a million. I know my bonding company it tighting up, they want more information and so forth, but I feel much more secure that I will get paid doing public work instead of private.

My experience with public work continues to be that if the project is funded by the contract administrators or an agency attached closely thereto, the money is pretty quick and easy. You just have to do your paper work PERFECTLY, and have systems in place to get around each roadblock they throw up. We typically have someone hand deliver our invoices to each person who's signature is required for release and never have too much trouble. When the funds are state or federal, it usually takes a little longer, but again it is simply an issue of having all of your ducks in a row, and navigating a much larger and less concentrated organization. The unfortunate thing about bonding in this case is that if you are a sole proprieter, your personal credit and balance sheets are all they are going to be concerned with. The first step to getting all of this set up IMO is to incorporate a company, and put your equipment in that corporation so as to protect your livelyhood and earning potential from future financial mishaps (personal or business). Are you married and if so is your wife on the same mortgage as the one that is in default?