I went to see a contractor yesterday who discovered very quickly that the bonding process and guidelines are a lot tougher than it was in the past.  His company was bonded 5 years ago, when getting a surety to give you credit was practically as easy as picking up the phone.  Times were a lot different then, here is the reality of now and the most important things you need to prepare for:

• Year end Financial Statements: This is the single most important financial piece of information that will determine your bonding capability for the year.  The presentation must be done by an accountant who can do it on a percentage of completion basis, with over and under billings.  A good agent can help you find creative ways to enhance your statement.
• Bank Line of Credit: What happens when you start a 1 million dollar job, and something goes wrong?  (Unexpected expenses, owner delays/refuses to pay on time, etc)  Where is the money to fund the job going to come from to keep the cash flow going until things get sorted out?  That’s right, the bank line, and it needs to be comensurate with the surety program you are looking for.  No bank line… no surety.
• Aging of Receivables: Do you have receivables over 90 days old?  The surety company wants to know, as anything over 90 is discounted from you working capital.  If there is a lot of over 90 receivables, there better be a good reason why, and a plan to get you paid quicker.
• Personal Financial Statements:  The surety company wants to know what you’re worth, personally.  Why?  If things went terribly wrong and multi-million dollar claims were filed, do you have skin in the game to get the problems worked out, or will you just run away.    The surety companies want to know, and it’s hopefully the former.

There are other things you need as well, such as: personal tax returns, corporate tax returns, work in progress schedules, contractors questionnaire, reference letters, etc.  Some more critical than others, but all necessary for the underwriting process in this tough credit market.  Information and presentation are key, so if know what you need and how to present it, you are on your way to having a surety partner.