Another Beginner with a question

[cainsh]

I own a consulting company that also provides management services for recreation facilities. We are looking at a few management rfp's that require performance bonds (and some that require bid bonds also). Our company is service based and the company itself owns no significant assets. Will we be able to get a bond? Will it be based on the credit of the 3 owners, and will there be personal guarantees and if so, how risky is this? And what is 'bad credit'? One of my partners has some black marks for late payments on credit cards, etc, but has still been able to get mortgages, car loans etc.

[Riskwriter]

Good questions all around-

For one thing, you will fine that there are fewer Bonding companies who will entertain service contracts as they frequently have a multi-year term and can renew with option years at the principals (you) sole discretion.

Regarding your question on how the surety will underwrite, depending on the size of the contract, the surety will base most of their decision on the review of the corporate assets. I.e.- if you don’t have much a corporate balance sheet, you can likely bet that getting a bond is not in your favor.

Regarding your question on credit- personal credit should be strong (approx 650 or higher with minimal negatives) however, this is much smaller determining factor when it comes to contract bonds such as this. The review of personal credit is looked at much more closely when underwriting commercial bonds of smaller bond amounts.

Personal guarantees are almost ALWAYS required in all instances and most sureties also require spousal indemnity as well.

How risky is this? How to determine really. That answer solely depends on your abilities to complete the contract within the terms of the contract. If you are able to do so and make a profit- then not very risky at all.

Hope you found some help in my ramblings.