Transcript Understanding the Benefits of Surety Bonds

Understanding
The Benefits
Of Surety
Bonds
What is Surety Bonding?
Principal
Obligee
Surety
Types of Surety Bonds
• Bid Bond
• Performance Bond
• Payment Bond
Types of Surety Bonds
• Bid Bond
• Performance Bond
• Payment Bond
Types of Surety Bonds
• Bid Bond
• Performance Bond
• Payment Bond
Benefits of Surety Bonds
Surety Bonds
• Provide capable &
qualified contractors
• Assure project
completion
• Offer financial security
• Technical, managerial,
or financial assistance
Benefits of Surety Bonds
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
vs. Letters of Credit
Surety Credit
Premium
Bank Credit
Interest
Expect
Repay loan
reimbursement if loss
Principal benefit of
surety credit
Borrower has benefit
of bank $
Who Benefits
From A Surety Bond?
Primary Decision Makers
Private Owners
• Surety assures
qualified contractor
• Surety provides
expertise, experience,
& assistance
• In event of contractor
failure, surety handles
& completes project
Primary Decision Makers
Bankers &
Lenders
• Assures project will be
built according to
terms & conditions of
the contract
• Lender can be dual
obligee with direct
rights under the bond
Primary Decision Makers
Public Owners
• Protects taxpayer dollars
• Assures that lowest
bidder is capable of
completing the project
• Necessary payment
protection for
subcontractors &
suppliers
Influential Advisors
Owner
Developers
Risk
managers
Architects
Lenders
Attorneys
Surety
Architects/
Bonds
Engineers
Engineers
Subs
CPAs
Contractor
Surety Bonds
Financial
Security
Construction
Assurance
For More Information
Surety Information Office
1828 L St. NW, Suite 720
Washington, DC 20036
202-686-7463 | Fax 202-686-3656
www.sio.org | [email protected]