Upgrade Your Contractor Clients’ FastBond to a Standard Bond Program

This post is part of a series sponsored by Old Republic Surety.

Your contractor clients today have more opportunities to work on higher-value projects in both the public and private sectors. According to an industry outlook report by the Associated General Contractors of America, in 2024, contractors expect demand for construction projects in 14 out of the 17 construction categories surveyed to increase in 2024. Some of the sectors with the largest expected growth include sewer and water, highway and bridge, federal projects, power projects and healthcare facilities.

This is an ideal time for you and your contractor clients to discuss actions and strategies that can help them qualify for increased bonding capacity.

Many smaller or newer-in-business contractors obtain bonds on smaller sized projects through abbreviated underwriting programs such as Old Republic Surety Company’s FastBond program to get the needed bonds for those contracts. FastBond streamlines the underwriting process, is primarily credit-based, and doesn’t require the extent of financial and other underwriting information needed to qualify for a standard bond program for larger contracts.

Reasons to upgrade a contractor’s bonding capacity

Let’s look at why your contractor clients should consider moving from a FastBond-type program to a standard contract bond program and how they can do so.

• The contractor wants to grow and increase profits Converting to a standard bond program opens up opportunities for larger and more diverse contracts. Competition is limited on many larger contracts, helping to raise the possibility of increased profits.
• The cost of the bond itself. FastBond programs are designed for a contractor that has occasional bond needs, and FastBonds are typically charged higher rates. Old Republic Surety writes FastBonds that can go as high as $2 million aggregate, generally at a $20 to $30/thousand rate. Standard program rates are lower, enabling the contractor to tender more competitive bids and possibly earn better margins on their work.

5 steps to transition from a FastBond program to a standard program

Standard bond programs require more sophisticated financial information and cost systems. Contractors can increase their bonding capacity with a standard bond program by following these five steps:

• Unannounced job site inspections
• The use of approved contract forms
• Proper documentation of change orders
• Proof of insurance for all subcontractors
• Protection of assets such as equipment and materials
• Written safety policies to minimize job site hazards
• Incentives that reward employees for bottom-line profit

Old Republic Surety Company prides itself on taking a consultative approach with contractors that are willing to follow the needed steps to increase their bonding capacity. We can provide you with the advice you need to take your bonding program to the next level. Contact your bond agent for more information, or contact us so we can connect you with the best bond producers in the business.