Who Issues Performance Bonds?
Performance Bonds are usually issued by a financial institution such as a bank, insurance company, or a surety company as a form of financial guarantee and a form of security that contractors will meet their contractual obligations. This offers a level of protection against risks, ensuring financial protection.
This article will discuss what a Performance Bond is, the process of being issued a Performance Bond, as well as how you can ensure that the bonds are issued as quickly as possible.
At CG Bonds we operate a best price guarantee policy, and we work closely with both contractors and underwriters to ensure an efficient and streamlined process. Get in touch to find out more about our performance bond services.
What Is a Performance Bond?
Performance Bonds, also known as Contract Bonds, are a type of Surety Bond that is often used in the construction industry as a construction contract agreement between a contractor and a beneficiary.
The purpose of a Construction Performance Bond is to ensure that the contractor will complete the construction project on time, deliver to the standard contract terms and financial obligations, and ensure the satisfactory completion of the construction project.
Should the original contractor default by not meeting their financial obligations, the bond provides project owners with financial compensation to cover the cost.
What is the Process of Obtaining a Performance Bond?
Obtaining a Performance Bond can be a relatively straightforward process. Typically, when you apply for a Performance Bond, a surety/ insurance company will request the following information:
- Completed & Signed Application Form
- Most Recent Audited Financial Accounts
- Draft Bond Wording
- Latest Management Accounts (if available)
- Copy of Performance Bond Wording (if available)
CG Bonds can help contractors throughout the entire performance bond application process, ensuring peace of mind. We have made the application and issuance of Performance Bonds an easy and pain-free process. We have a quick, easy online application process, and dedicated account managers who provide an over-the-phone application assistance service.
How Quickly Can Performance Bonds Be Issued?
The speed for acquiring a Performance Bond does vary as it is largely dependent on the responsiveness of all parties (principal, employer, surety bond companies).
Here at CG Bonds, formal quotations are typically provided anywhere between 5-7 working days upon receipt of a full application form and supporting information.
However, we recognise some contractors are requested for a bond just before site commencement, therefore, requiring a bond urgently. At CG Bonds, we pride ourselves on securing bonds in a timely and efficient manner.
Can the Performance Bond Issuer Reject an Application?
This is dependent on a range of factors, such as the client’s financials, site particulars, and the surety provider’s criteria and appetite in the market. As such, some applications can be rejected from the markets for various reasons.
At CG Bonds, we have an extensive and exclusive underwriting panel, allowing us to provide bond solutions to clients of all financial strengths.
Before approaching the market, we will support you throughout the entire process, ensuring your application form is completed with the required information. We will also make sure you have included all the financial information required, so that all you need to do is prepare to start your work on the project.
CG Bonds has a 100% track record in securing Performance Bonds for contractors, regardless of their size or financial strength. With our years of experience in the bond market, we can guarantee that you will get the Performance Bond you need to complete your project
CG Bonds: Your Solution For Urgent Bond Needs
When faced with strict time constraints, it can be difficult to hit the necessary deadlines to get a Performance Bond in place. This is why at CG Bonds, we work closely with our contractors to collate all the required information, ensuring the bond is issued in a timely manner.
CG Bonds is a specialist Surety Bond broker that can source and secure the best value Construction Bonds for your construction project in the market, whilst using our years of unrivalled experience to make it a stress-free and simple process. With our extensive and exclusive underwriting panel, we are able to offer a Best Price Guarantee, whilst also maintaining our 100% track record in fulfilling bond requirements.
Get in touch with our advisory team today to start your Performance Bond application
The information provided in this blog is not intended to constitute legal advice or any other advice of a professional nature. The recipient of this information contained in this blog should always consult legal or professional advice.
