What Bonding Companies Look For in a Contractor

Bonding companies look at far more than just owners’ personal credit when it comes to construction bonds over $250,000. A surety wants to have confidence in their bonded contractors prior to approval. There are numerous different actions a contractor can take to instill confidence in a bonding company. A contractor must be organized and practice restraint when necessary to gain the trust of an underwriter.

Partner With a Surety Expert

For most, the best way to run a company in an organized fashion is to hire professionals they can count on to assist in decision making. A bond producer well versed in contract bonding should be a top priority. If your agent is not knowledgeable enough or does not have the markets to fit your company’s needs, then there is little they can do to help with your bonding needs. An experienced bond producer is a must to ensure you are competitive in your bids and to allow for a bond line size that suits the needs of the contractor. An accountant that understands construction is a must.

Business Financials Are Crucial

The business financial statements are the highest weighted item for underwriting a contractor. You can think of them as the underwriter’s window into your company. A contractor must walk away if their accountant does not know how to complete financial statements on a percentage of completion basis. A good relationship with a banker is a rather obvious need for any business that relies heavily on loans to operate. There are numerous other professionals that one could utilize such as a good controller and legal counsel, but we will stop our list here so it still applies to most contractors.

An Open Conversation with Surety Underwriters Goes a Long Way

Surety underwriters will want to periodically meet with their medium to larger sized contractors. The underwriter will want to see that the contractor knows their cash flow and their receivables that are over 90 days. The underwriter will also want to see that the contractor can answer all other questions regarding their company. In other words, the underwriter will want to leave feeling confident that the contractor knows their industry and the specifics on their company.

Earlier, I mentioned that a contractor must practice restraint when necessary. By restraint, I mean that they can not be blinded by profits and take risks above and beyond their ordinary work. A surety will not be comfortable approving a performance bond twice the size of any previously bonded work for a new company. A red flag is raised for any contractor that wants to do work outside of their niche and or territory. If an underwriter is not comfortable with the contract for any reason, they will decline the contractor.

A contractor must keep in mind that they are essentially obtaining surety credit. Underwriters must use the financial documentation provided and personal relationships to decide the risk on a particular account. A contractor that is well organized with a team of professionals to assist them will create a great deal of confidence in a surety’s underwriters.

Eric is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry, he is also a contributing author to the surety bond blog. He has held a range of different roles within the surety industry, from agent assistant to bond issuer, which gives him a unique insider perspective on surety related topics.



Off hand, what kind of net worth is needed to secure a performance bond for a $2,000,000

Michael Weisbrot

There is no set requirement, net worth will be looked at amongst other factors to make a judgment call on whether you are a good risk. Working capital is typically the most important factor.

Do you have business financial statements prepared by a CPA? If so, we can have a contract bond specialist give you an idea of what you qualify for without having to fill out all of the applications.

N. Sander

If I declared bankruptcy almost 2 years ago (personally), would I be able to get a construction bond for my company?

M Bradley

Would a staff CPA suffice or would we need an outside/independent CPA to provide all the periodic financials?


My partner and I have not so good credit but not bad credit is it possible still to get a bond

Michael Weisbrot


That depends on what type of bond you need and how relatively good your credit is…

Do you need a bid/performance bond or a contractor license bond?


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