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Tag Archives: Texas

Cracked: The why and how of performance bonds in Texas

When you are developing your business in the construction field in Texas, you quickly learn that you have to play by many rules. If you are a newbie, it is likely that the amount of licenses, permits, regulations and administrative steps might discourage you. With time, however, it does get easier and your contractor business can flourish if you have accurate information and a spoonful of business acumen. That is why it is important to thoroughly get acquainted with the legal procedures for contractor work – especially if you are taking public work projects in Texas. An important step in the bidding and performing such projects is obtaining the necessary surety bonds – and here accurate information comes handy.

 

Austin, Texas
Austin, Texas
Photo credit: Stuck in Customs / Foter / CC BY-NC-SA

Why do I need a performance bond as a contractor in Texas?

First things first: you might wonder what a performance bond is at all. It is a type of surety bond that is required in the State of Texas in the cases of federal construction projects under the Miller Act, public projects over $100,000 for Texas governmental entities and also in private projects when the owner decides he would like to include one. While insurances act as a protection for your business, contract surety bonds are a protection mechanism for the public. As they represent a credit given to your company prior to your actual work, their premium is a safety net, guaranteeing that you will fulfill your obligations under the contract. In case you do not meet the requirements of the contract, a claim can be filed on the bond.

When you bid on public work projects, you also need a bid bond in the beginning of the process. It is a requirement when you are submitting a proposal on a public contract. It is actually a guarantee that once you are awarded the project, the surety bond company will underwrite a performance bond for your work. There is another relevant bond as well – the payment bond, which is often combined with the performance bond as a performance and payment bond. The payment bond is a guarantee that you as a general contractor will pay your subcontractors and supplies for their work on the project.

 

How do I get a performance bond?

Obtaining a performance bond happens through using the services of a surety bond agency. Usually the bond price is a percentage of the total contract amount and can be estimated in advance. However, if you are bidding on public works projects in Texas, you actually will not pay anything for the bonding. You will just need to include the bond price in the specifications of your bid proposal. In this way, it will be included in your project costs. This is not a hidden trick – it is a common practice that the bonding costs are covered by the project finances because the government wants to ensure that the taxpayers’ money will not be wasted in case of a contractor’s default.

How To Increase Your Contract Bond Line
How To Increase Your Contract Bond Line [Video]
When it comes to smaller projects below $300,000, the bond price is based solely on the credit score of the contractor. With bigger projects, you need a larger scale surety bond agency, as the underwriting process is more elaborate and will require an increased bond line. Take a look at our video for tips on how to increase your contract bond line, so that you can bid on larger projects.

 

Kick starting your business as a contractor bidding on public works in Texas just became easier – you just need to get acquainted with the legal requirements and learn a few shortcuts. And when it comes to getting bonded for your project – once knowing what a surety bond entails, it is wise to use a well-established large-scale surety bond agency.

An easier start for mortgage brokers in Texas: how to save on your licensing process

When it comes to licensing a new mortgage brokering business, everybody is aware that there are some administrative steps involved, as well as considerable costs. Thus, it is important to know how and where to start from, so that the path is smoother and less cumbersome. It is also useful to see at which points there are possibilities to take shortcuts and save on the costs – read on to get to know about some of them.

 

How to get licensed in Texas

The main part of the licensing process passes through submitting an application form and the required documents at the Nationwide Mortgage Licensing System (NMLS). In the State of Texas, there are two relevant agencies – the Texas Department of Savings and Mortgage Lending (TDSML), which is the one you need to be in contact with, and the Office of the Consumer Credit Commissioner (OCCC), which deals with Residential Mortgage Loan Originator Licenses. Although every state has specific rules regarding the operation of mortgage brokers, the licensing is handled on the nationwide level. When you apply with the TDSML for a Mortgage Company License, you would need to pay $275 as a licensing fee, which is one of your set costs.

Texas is one of the states requiring also that the mortgage broker actually operates from a permanent physical office. This means that even if your works are conducted online, you would still need to have a working base within Texas and have your license there, so it is good to consider this beforehand.

A prerequisite for the licensing process is that the mortgage company applicant has been active in the real estate mortgage industry for three years or, alternatively, for a year and a half but also has relevant educational experience. Other requirements include personal financial statements, waiver for obtaining a credit report, as well as a $50,000 surety bond.

 

Austin, Texas
Austin, Texas
atmtx / Foter.com / CC BY-NC-ND

 

And now for saving: surety bonds

As it is apparent from the requirements list, the surety bond is an indispensable one if you would like to get your mortgage brokering business going. However, this is precisely the point of the licensing process where you can take a shortcut and reduce the costs by making the right choice.

If you are new to the field, you might wonder what precisely the purpose of these bonds is. Unlike insurance, a surety bond is a tool to protect your clients and the state. They guarantee that you will adhere to the laws of the state of Texas in your mortgage brokering operations. The bond is a form of credit provided by the surety company, as they are guaranteeing you. You can get bonded through a surety bond agency.

 

How To Become A Mortgage Broker
How To Become A Mortgage Broker [Video]
 

What you would have to pay is a percentage of the surety bond, which can be estimated in advance. This is the point at which you can actually lower the costs during your licensing process. Most surety bond providers look at a variety of factors in calculating the surety bond price, which include personal and business finances, professional experience, as well as your personal credit score. Saving on your mortgage broker license surety bond requirement is possible only if you turn to a large scale surety bond agency because their way of operation is more flexible, relying on strength in numbers. They need to consider only your personal credit score, which saves you the trouble of improving multiple factors. You would need to improve only your credit score, thus making the whole process considerably easier and cheaper.

Your auto dealership business in Texas: Tips on getting a lower surety bond price

In a state like Texas with abundance of space and motorways, the auto dealership business seems to be a lucrative one. Getting an auto dealership license, however, involves several administrative steps in order to obtain your registration and permission to operate in the state.

 

The starting point for the licensing process is the Texas Department of Motor Vehicles (TxDMV). There you can find in detail all the requirements that you need to meet, as well as all the forms to be filled and the fees that you have to pay before opening your business. There is even a Dealer Manual, which is quite useful.

 

Some of the most important steps are completing the Auto Dealer License Application, available on the TxDMV website, and afterwards obtaining your General Distinguishing Number with the Texas Department of Transportation, which is a legal requirement for any activities involving buying or selling of motor vehicles. You will need to have a permanent office/place of operation and you will need a surety bond as a requirement for the license issuance.

 

Palomar Health Center
Austin, Texas
PHOTO BY DANIEL REESE/KUT

 

I guess that while reading this, by now you are already quite worried about the costs of the whole process. Indeed, obtaining an auto dealership license is not exactly a walk  in the park. There are, however, ways to minimize the difficulties and the financial burden of the process. One of these is to save on the surety bond requirement of the license. So, how does one do this?

 

Wait, what is an auto dealership bond?

An auto dealership bond is a kind of surety bond that is required by the State of Texas in order to be granted a license. It functions as a guarantee that your business is committed to abiding by the rules of the state. It is required both for new and used car dealers and is a safety net for your clients and the state.

 

How do I get bonded?

Nowadays, applying for an auto dealership bond is unbelievably fast and efficient – especially if you turn to the right surety bond agency. You can apply easily and get an instant online approval.

 

How do I get a lower bond price?

In principle, the price of the bond is a percentage of the amount for which you get bonded. In case you would like to have a rough idea, you can get an initial estimate of the surety bond price. This can be useful for you, so that you can plan it in your general costs.

 

License Bond: How to Get the Lowest Surety Bond Price
See how you can get a lower surety bond price [Video]

 

And here comes the trick: there are also possibilities to get an auto dealership bond through consideration only of your credit situation. This gives you better chances for a lower bond premium and much more freedom in the bonding process. You would not need to make elaborate schemes and go through complicated underwriting algorithms. You would have to consider improving only one factor – your credit score. Some surety bond agencies are able to do this because of their “safety in numbers” – they operate at such a large scale that this simply is feasible. Thus, the most important tip for obtaining a lower surety bond price for your auto dealership license is to boost your personal credit score and use a flexible surety bond agency with a massive volume of bond writing.

 

And now, down to business: how do you lower the price of the bond? The fine line is in the approach towards assessing your financial situation. Some surety bond agencies take into account a multitude of factors when estimating the bond price, which include personal credit, bank balances, years of experience, business financials and so on. Thus, sometimes even with a perfect personal credit, you might get a high surety bond price because some of the other criteria drives it up.

Texas Talent Agency Bond Update

Texas Talent Agency Bond
A couple of surety bond requirements were eliminated in Texas due to a new law. The new law is named HB 3167/SB 1168 and removes the law requiring bonds in the amount of $10,000 and $5,000 for talent agencies and personnel services respectively.

Texas Credit Service Organization Bond

Texas Credit Service Organization Bond
Credit service organizations must follow special surety rules in Texas thanks to a new law. The new law is titled HB 2594 and requires credit service organizations who participate in deferred presentment transactions or motor vehicle title loans to acquire a surety bond. The required bond must be in the lesser amount of $10,000 for the first licensed location and $10,000 for any additional license, or $2.5 million. Credit service organizations who obtain this bond no longer need to obtain the bond required of all credit service organizations.

Texas Off-Premise Advertising Bond

Bond
Texas has added new surety legislation concerning advertising signs. The new law is named SB 1420 and requires a $2,500 surety bond in order to obtain licensure for installation of off-premise advertising signs. The bonds will be in place to guarantee compliance with state law.