ICC bond for a new business

[Freight Hauler]

I am starting my own freight broker business and the ICC is required a $10,000 bond. I have good credit and I own a home, how do I go about getting this bond?

[Admin]

Unfortunatly, ICC bonds are considered a high risk surety bond due to their high claim ratio. Few sureties write this bond anymore and most that do require collateral.

To my knowldge there is only one surety that writes this bond with no collateral. Unfortunatly, they require business financials for the most recent fiscal year end. Since you are just starting you won't have the required financial statements, making you uneligable for their program.

I always tell me ICC clients to post the $10,000 directly to the ICC for the first year, I believe the application is called the BMC-85. You will want to apply for the bond next year so then you are not bonding yourself. This way if there is a claim you will atleast have a bonding company to try to fight it rather then having the ICC freely give your funds away at the drop of a hat.

Be sure to try for the bond next year

Let me know if there is anything else I can help you with.

[Mark1]

I too had the shock of discovering as a new broker that obtaining a bond would be difficult. I'm still in the middle of setting things up. Providing you have $10,000 on hand, download form BMC-85 from the Federal Motor Carrier Safety Administration website. Fill in the requested information and take the paperwork to your bank. Your bank will set up a trust fund so you can qualify. After they fill in their portion of the form and return it to you, send it in to the FMCSA. Only a financial institution may qualify as a trustee. After your first year in business have a qualified accountant perform a financial analyisis of your business. If all looks good, look into obtaining an ICC bond. After you secure an ICC bond, not before, then cancel the BMC-85. If your financial analyisis is not quite what it should be, wait one more year and try again.

[Surety Guy]

Mark1, great post...I always give clients the same advice. I wasn't aware of the process for the BMC-85, as I only deal with the bond (BMC-84).

When you apply for the bond you will not only need CPA prepared business financials, but also good credit. If you have any tax liens or collections on your credit you will have to post the funds using the BMC-85 until they are atlest 3 years old. Home ownership is always a plus, more equity the better.

With it being such a pain to obtain the bond, you would think many would just not bother. However, when you look at the advantages of the bond over posting the cash it is quite obvious as to why someone would go through such a headache. For one, the bond frees up $10,000 capital for you to run your business. The biggest reason to obtain the bond is for if and when a claim arises. Afterall, do you really think the ICC is going to take much time looking into the matter when they can just end it by spending your money? With the bond you atleast have a surety going to the table for you and your interests.

You should also keep in mind that you should do everything you can within reason to prevent a claim from happening. Once you have one claim on your MC#, you will not be able to obtain the bond again (unless the market drastically changes, but I wouldn't count on that).

[Joachim]

Well it took me a month...but I got the $10,000 bond. Onward hoe to the next challenge...Thanks for the info and good luck all..

[Surety Guy]

Well it took me a month...but I got the $10,000 bond. Onward hoe to the next challenge...Thanks for the info and good luck all..

Were you able to obtain it without posting collateral?

[Joachim]

No collatoral needed...just the $500.00 fee the broker charges. But they did need a very detailed personal financial statement.

[Surety Guy]

No collatoral needed...just the $500.00 fee the broker charges. But they did need a very detailed personal financial statement.

Did the surety request any business financials? I am curious, what surety (not agency) was the bond written through?

[servingbonds]

We might be able to help you. This is generally a tough class of business for new comers, I spoke to one of my markets and while there are no guarnatees, they will consider the ICC broker bond for new buisnesses. However, they require a few things to start the process:

their own application,
start up buisness financial statement,
resume of experience
personal financial statement to be fully completed.

Please reply if interested and I will provide the forms needed.

Thank you,

I am starting my own freight broker business and the ICC is required a $10,000 bond. I have good credit and I own a home, how do I go about getting this bond?

[Surety Guy]

We might be able to help you. This is generally a tough class of business for new comers, I spoke to one of my markets and while there are no guarnatees, they will consider the ICC broker bond for new buisnesses. However, they require a few things to start the process:

their own application,
start up buisness financial statement,
resume of experience
personal financial statement to be fully completed.

Please reply if interested and I will provide the forms needed.

Thank you,

With how conservative the current surety bond market is, i don't think any surety will write it without collateral, many times 100%. In this case it would only be a bad idea to obtain the bond, as they would in effect be bonding themselves and still paying the surety premium. A beter route is the BMC-85, which is posting the $10,000 to the ICC directly.

Please let me know if you have a surety that will write the bond for a new business with no collateral. I always refer new businesses to the BMC-85 for the first year and tell them to obtain the bond for the following business years.

Here is a link of a post another member had on how to apply for the BMC-85.