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| Originally Posted by Numbers How does a contractor bond line work? |
The surety company analyzes the finances and history of the firm and sets an amount for the total liability it's willing to extend on behalf of the contractor. Unless it's a collateralized account, there's a fair amount of flexibility in the limit based on job characteristics (for example, how long for completion, in or out of contractor's usual territory) and incomplete work on hand, both bonded and unbonded. The agent and underwriter review job status on a regular basis to determine outstanding liability and as jobs are completed, it opens up additional capacity. This is a very superficial overview of the process, but you can compare it to the limit set for your Visa card. It's subject to periodic review and if handled well, Visa will keep your account open and might even increase your limit.