Understanding The Benefits Of Surety Bonds

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Understanding The Benefits Of Surety Bonds
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What is Surety Bonding?
Obligee
Principal
Surety
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Types of Surety Bonds

• Bid Bond
• Performance Bond
• Payment Bond

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Types of Surety Bonds

• Bid Bond
• Performance Bond
• Payment Bond

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Types of Surety Bonds

• Bid Bond
• Performance Bond
• Payment Bond

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Benefits of Surety Bonds

• Provide capable qualified contractors
• Assure project completion
• Offer financial security
• Technical, managerial, or financial assistance

Surety Bonds
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Benefits of Surety Bonds

• Reduce risk of liens filed by subcontractors,
  laborers, suppliers
• Protect taxpayer dollars
• Smoother transition from construction to
  permanent financing
• Lower costs

Surety Bonds
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Surety Bonds vs. Letters of Credit
Surety Credit Bank Credit
Premium Interest
Expect reimbursement if loss Repay loan
Principal benefit of surety credit Borrower has benefit of bank
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Who Benefits From A Surety Bond?
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Primary Decision Makers

• Surety assures qualified contractor
• Surety provides expertise, experience,
  assistance
• In event of contractor failure, surety handles
  completes project

Private Owners
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Primary Decision Makers

• Assures project will be built according to terms
  conditions of the contract
• Lender can be dual obligee with direct rights
  under the bond

Bankers Lenders
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Primary Decision Makers

• Protects taxpayer dollars
• Assures that lowest bidder is capable of
  completing the project
• Necessary payment protection for subcontractors
  suppliers

Public Owners
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Influential Advisors
Owner
Developers
Lenders
Surety Bonds
Risk managers
Attorneys
Architects/ Engineers
Engineers
Architects
Subs
CPAs
Contractor
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Surety Bonds
Financial Security
Construction Assurance
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For More Information

• Surety Information Office
• 1828 L St. NW, Suite 720
• Washington, DC 20036
• 202-686-7463 Fax [phone]
• www.sio.org sio_at_sio.org