Prequalification of the Contractor

Sureties are able to accept the risk of contractor failure based on the results of a thorough, rigorous, and professional process in which sureties prequalify the contractor. This prequalification process is an in-depth look at the contractor's business operations. Before issuing a bond the surety company must be fully satisfied, among other criteria, that the contractor has:

• Good references and reputation
• The ability to meet current and future obligations
• The experience matching the contract requirements
• The necessary equipment to do the work or the ability to obtain it
• The financial strength to support the desired work program
• An excellent credit history and
• An established bank relationship and line of credit

Before issuing a bond, the surety company must be satisfied that the contractor runs a well-managed, profitable enterprise, keeps promises, deals fairly, and performs obligations in a timely manner. Surety bonds have played an important role in the construction industry's success, allowing the industry to sustain its position as one of the largest contributors to the nation's economic stability and growth.