In today’s competitive construction industry, partnering with the right bonding company isn’t just smart - it’s essential. The wrong choice can cost you time, money, and even your reputation. While price matters, it’s not the only factor. A low rate could signal issues with the company’s rating, licensing, or bonding capacity. Here’s what to look for when selecting a construction bonding partner.
- Bonding Company Rating: Bonding companies are rated by A.M. Best based on financial stability and ability to pay claims. Ratings range from A++ (Superior) to F (Poor), with “S” indicating a suspended rating. Some obligees require bonds from A-rated companies, so confirm the rating before you commit.
- Licensing Matters: Your bond is worthless if the bonding company isn’t licensed in your state. An unlicensed company can delay your bidding process and waste resources. NFP is licensed in all 50 states, ensuring compliance for both single and aggregate bonds.
- Capacity Counts: Construction projects often require large construction bonds - and sometimes multiple bonds across different states. Your bonding company must have the capacity to meet your credit needs. Capacity is essentially the maximum amount of bonding credit available to you.
- T-Listing for Government Projects: If you bid on federal projects, your bonding company must be T-listed by the U.S. Treasury. This listing confirms financial strength and reliability. NFP partners with several approved, T-listed companies to meet these requirements.
- Qualifications for Bonding: To qualify for a construction bond, expect to provide:
- Strong business and personal credit
- A proven track record
- Adequate liquidity
- Solid company organization
Good communication with your surety can improve your chances - even if your experience or credit is limited. NFP offers solutions for companies with challenging profiles.
Impact on Project Timelines and Bidding
Choosing the wrong bonding company can derail your entire project before it even begins. If your bonding partner isn’t properly licensed or lacks the required rating, your bond may be rejected by the obligee - forcing you to scramble for alternatives at the last minute. This can lead to missed bid deadlines, disqualification from lucrative contracts, and reputational damage that’s hard to recover from.
For government projects, the stakes are even higher. Federal and state agencies often require bonds from T-listed companies. If your bonding company doesn’t meet this requirement, your bid won’t even be considered. In a competitive industry where margins are tight and timelines are critical, these delays can cost you thousands in lost opportunities.
The takeaway? Vet your bonding company early and thoroughly. Confirm licensing, ratings, capacity, and T-listing status before you submit a bid. A proactive approach ensures you stay competitive and avoid costly setbacks. NFP can help you find the right surety bond fit for your business.
