Consent of Surety
Consent of Surety
If you’re looking to bid on a project or tender that requires a Consent of Surety or Bid Bond, you’ve come to the right place! We provide full contract bonding services to our clients for all types of projects and contractors. Learn more below and apply for your bond online today.
Frequently Asked Questions
A Consent of Surety (also called a Surety’s Consent or Agreement to Bond) is a document used during the bidding phase of a contract tender. It is often used in conjunction with a Bid Bond, but sometimes on its own as well. It guarantees the owner of a project being tendered that a Surety company will issue the required bonds in the event a contractor is successful on said bid (low bidder).
These guaranteed bonds are referred to as “Final Bonds” and apply directly to the project in question. The types of bonds being guaranteed commonly include Performance Bonds as well as Labour & Material Payment Bonds (eg. 50% Performance & 50% L&M).
Consents of Surety can be issued through what we call a “Bond Facility” which you can learn more about below.
A Consent of Surety is required by many project owners for substantial sized contracts (usually jobs greater than $50,000 in value). These can be both private as well as municipal contracts. From the owners perspective, requesting a Consent of Surety will ensure that the contractors bidding on their project are able to provide the further required bonding if they’re successful on the contract tender.
The cost of a Consent of Surety will depend on the type of Bond Facility you have. So, what’s a bond facility? Think of it as an annual subscription, or long-term ability to provide the kinds of bonds you need to. The cost of the Consent of Surety document itself doesn’t cost anything; however, setting up a Bond Facility does come with some costs. Have a look through the details below with respect to Bond Facilities or apply through our online application to get things started.
Don’t worry! Applying through our online portal doesn’t cost anything, and does not hold you under any obligations once a quote has been provided. Customer service is our first priority
As we’ve mentioned above, the ability to provide a Consent of Surety is done through a Bond Facility (learn more below or apply online). You can apply for a Bond Facility by completing our online application. If you’d like to discuss how your business can provide a Consent of Surety or other Surety Bond, don’t hesitate to give us a call and we’ll walk you through the process.
You’ll often see businesses advertise that they are “Bonded”, but what does this really mean? When it comes down to it, there are a few different definitions and ways a company can be considered “Bonded”.
The most common type of bond a business has is usually some sort of a License Bond (also referred to as a Commercial Bond). These bonds typically have smaller values attached to them in the range of $5,000 – $50,000. However, Contract Bonds (which include Bid Bonds, Performance Bonds, etc.) are the type of bonds that enable a company to perform bonded works or bid on tenders requiring bonding.
Contract Bonds are facilitated by what we call a Bond Facility which we delve into next.
A Bond Facility is an annual program that enables you to provide the bonds that your business needs. Think of it like a gym membership – only, instead of having access to a gym, you have the opportunity to provide the required bonds when they’re needed. Once a Bond Facility is set-up, it is fairly inexpensive to maintain; however, setting one up does require a significant amount of information with a similar process to establishing a banking relationship.
As a Surety Bond Broker, we shop your business’ financial position to various Surety Companies to ensure you’re able to provide bonds for the projects and contracts you need them for at the best rates available.
The best way to get started is to apply today! There is a checklist of documentation we’ll need to get started to get your business a Contract Bond Facility. Surety Companies may request slightly different information based on their particular Underwriting philosophies, but in general we’ll require the following:
- Your Company’s Financial Statements: this includes Balance Sheet, Income Statement, Accounts Receivable, Accounts Payable, and Work On Hand Statement (Review Engagement Statements are preferred, but occassionally in-house can be accepted).
- Personal Financial Statements for each Shareholder: acquiring bonding for your business often includes a personal guarantee / indemnity.
- Contractors’ Questionnaire: we want to understand your business – it may be requested that you complete a brief summary document outlining your companies history and more details of ownership structure, etc.
The annual cost of a Bond Facility will vary depending on what we call the “Three C’s” of Surety – these are:
- Character: this includes the experience of key personnel within your business and history of completed contracts
- Capacity: this references the size of projects that your company would be able to complete (enough employees, etc.)
- Capital: an evaluation of the funds available to bridge payments during a contract duration including operating lines, liquidity of assets, and more
These factors will all play a role in not only the cost of your Bond Facility, but the limits of bond values you are able to provide. Essentially, the stronger you and your business are financially and historically in your field, the better. A good estimate for the annual cost of the ability to provide bonds is about $1,500. Final Bonds such as Performance or L&M bonds are an additional cost depending on contract size and the rate determined from your business application.