Surety bonds are growing a lot in popularity these days among start-up companies, and this is because they provide a guarantee of payment to a first party when the surety company is unable to do so. Some businesses require bonding since most start-up companies need a lot of external support to run their businesses and slowly establish goodwill, which can be expected in the form of bonds.
A surety bond agent can help you quickly obtain such bonds depending on the requirement of your business or company. Such bonds are usually of four types, each of which has a different purpose.
Types Of Surety Bonds
There are various types of surety bonds, each of which has a different purpose. Such a bond is used for commercial and judicial purposes, which is why they share different purposes. Here are the different types you will come across:
Permit And License Bond
Used for businesses, newly-formed businesses have to go through a lot of legal procedures, and meeting the state requirement is mandatory. Permit and License bond help businesses maintain the licensure required for running a smooth business. Such a bond is easy to obtain, and approvals can be received in a single day.
Court Bond
Court bonds, also known as a judicial bond, are used in various court proceedings; they can be bail, criminal offenses, civil cases, and so on. In such judicial cases, the judge only proceeds with a case after providing proof of the bond.
Contract Bond
It is the kind of bond involving three parties: the principle, the surety, and the obligee. The obligee here is the government, the principal can be a business owner or even a contractor, and the surety here can be the insurance company that will act as a guarantor. Contract surety bonds commonly come in use in the construction industry.
Fidelity Bonds
Common among all types of businesses, a fidelity bond is provided during losses or illegal actions. They serve as companies’ insurance and ensure employer protection during harsh times. And this is the reason fidelity bonds are also referred to as ‘honesty bonds.’
Why Are They Necessary?
Some businesses require bonding to run smoothly, and surety bonding is one such. They are significant while working with government agencies or your company is associated with the construction industry. A Surety bond ensure:
- Your business is completing the desired work you have been hired for.
- Without a surety bond, you cannot proceed to work with government agencies.
- Construction jobs require a surety bond for safety and assurance.
- Some surety bonds even act as insurance during unexpected losses and mishaps.
- While proceeding with a case at the court, such bonds will serve as proof.
How Can Agents Help?
Obtaining surety bonds is hassle-free but involves some essential procedures. An agent can help you guide how to obtain a bond and all things you must be prepared for. An agent takes care of the whole bonding process and ensures the process becomes effortless and simple for you.
Without having prior knowledge of a surety bond may confuse you with the process of obtaining it. However, if you reach out to an agent, who is an industry expert, the process becomes smooth. Agents also ensure that you do not miss any critical steps while obtaining the bonds.
Final Words
Many dream of building a business, but the process is never as smooth as expected. It takes a lot of hard work to begin a start-up and turn it into a full-fledged business. Among such steps towards progress, surety bonds play a significant role.
When you reach out to an agent and obtain such a bond, you can easily get away with legal troubles, resolve licensure issues and deal with the nightmarish situations like sudden losses and frauds.