Axcess Surety
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(913) 318-4955
Axcess Surety was founded by Surety Bond Experts with the belief that surety credit should be accessible to those in all circumstances. Our people are industry leaders in surety bonding. We have access to industry leading surety bond companies, programs and tools to unlock surety for all. We hope you reach out to us first but many of our clients have been turned down by other brokers who claim to have surety expertise. Whether it's your first bond or you need a $50 million bond, contact us today to see how we can open doors to surety bonding!
contract bond
performance bond
A surety bond is a bond, which is created to protect the obligee against breach of the contract by the principal. This surety bond involves three parties; they are the principal, the obligee and the surety. In this surety bond, the surety gives guarantee to the obligee that the principal will perform his obligation as per contract. The surety bond involves many types. Performance of the contract determines the rights and obligation of the surety and the obligee. Mostly the contractor use contract bond and commercial bond.
With the help of the performance and payment bond the obligee can be ensured, that the principal will perform his obligation as per the terms and condition of the contract. In failure of the principal the surety has to finish the contract. The obligee has every right to sue the principal and the surety in failure of the contractor.
Prequalification of surety bond
The surety company issues surety bond to the contractor based on his performance of the job. When the principal complies with adequate capability to complete the job within the time specified and at the contract price, then this surety bond is issued to him. The Surety Company and the creator review the principal entire business operation. He should compose of adequate financial resources, well experienced and good skills to carry on the business. This process has been followed to reject the unqualified contractor from the bond.
Borrowing Capacity of surety bonds
To the some contractor, performance and payment bonds are issued even in an unsecured basis. This facility is provided based on the financial strength, experience and personal indemnity of the construction company. This bond issuance as no terms regarding the contractors financial position in the bank. But sometimes the contractors credit position is also revealed. When payment bond is issued to the subcontractors, they are protected by supplying proper labor to the contractor.
OUR WORK
We must first understand what a surety bond does as well as the factors that are involved that will determine the rate as well as obtaining a surety bond approval. The surety company will evaluate your credit, experience, and financials. The process is very similar to apply for a business loan. Rates vary on a multitude of conditions such as which state is it for, what type of surety bond is needed, what is the financial outlook for the company or individual, how much experience does the business have and of course, which surety company is writing it.
Most companies are looking for a credit score above a 670 with no public records, collections, or slow pays. They also review your business financials to make sure that your company has a positive net income and worth. The surety company requires that your financial equity be at least five times the bond amount. Therefore, if you are applying for a $50,000 Surety bond the surety is looking for a net worth above $200,000.
Remember that you are indemnifying the surety so the surety wants to make sure you are able to pay a claim if one occurs. If you meet these requirements and the type of surety bond is not considered hazardous such as a financial guarantee than you should be able to qualify for a preferred rate of 1% to 3% of the surety bond amount. Keep in mind that each surety has a minimum premium for a bond, which is usually $150.00 to $250.00, but you only run into these scenarios if your bond amount is under $25,000. So using a $25,000 surety bond as an example and the rate was at a 3% the cost would be $750.00.
Unfortunately, not every person or company can meet the surety requirements for preferred rates or even qualify for bonding, especially with the surety bond market tightening due to an influx of claims. Many Surety Companies will require collateral or simply decline your submission if you cannot qualify. Fortunately, there are still programs that will not decline your bond due to credit or other conditions they will just charge a higher rate.
Here is how is how it works if your business does not qualify for normal bonding the rate can be anywhere between 4% to 25% rate this is only for License and permit bonds.
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Axcess Surety Construction BondsAxcess Surety Maintenance BondsAxcess Surety Payment BondsAxcess Surety Performance BondAxcess Surety Bid BondAxcess Surety Contract BondSo if you where applying for a $100,000 Surety bond and your credit, financials or experience do not meet the surety companies requirements instead of declining you the rate will be higher for an example if you where approved at a 5% rate the cost would be $5,000.00 with no collateral. You may say to yourself well I would rather post the money with the state instead of paying a little more for my surety bond, you can of course do that but keep this in mind the state will not release your collateral until the statue of limitations is up. Therefore, after your bond is no longer needed or you are no longer in business the state will not release the collateral for several years.
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In today's unstable and unpredictable economic climate, surety bonds are extremely important for company owners who wish to ensure that the legal terms of their closed contracts and agreements are properly respected by all parties involved. The practice of establishing surety bonds dates back hundreds of years ago.
when such agreements had the role to increase the safety and efficiency of long-distance trade. Nowadays surety bonds can take various forms, play a wide range of roles and are commonly used to secure the terms of major contracts. At present, surety bonds are extensively used in the construction industry.
According to a series of recent studies, the construction industry in the US is a 445 billion dollar business that includes around a million contractors, up to 70 national contractor agencies and associations, and more than 7 million workers. Elaborate market investigations recently conducted in the US have revealed that over 60,000 contractors in the construction industry failed to respect their agreements over the last 10 years, canceling public and private sector construction projects worth more than 18 billion dollars. In order to prevent major financial losses and an entire succession of undesirable results, increasingly larger numbers of companies nowadays consider using surety bonds when closing major deals. In the construction industry and not only, surety bonds have a crucial role, enabling project owners to minimize serious financial risks.
Surety bonds generally establish a temporary tripartite relationship between the obligee (the secured party), the obligor (the principal) and the surety (the party that is secondarily liable). Suretyships basically require the surety to undertake the debt of another party (the principal). Although many people still confuse a surety with an insurer, they are two distinctive notions. Thus, it is very important to distinguish between suretyship and insurance agreements. For instance, a liability insurer may pay a third party on behalf of the insured, in which case the insured is under the protection of the insurer. By contrast, in case of surety bonds, the surety guarantees the performance of a certain contractor to the owner of a project, but the surety bond protects the project owner instead of the contractor.
Since they first emerged 100 years ago, surety companies in the United States have evolved considerably, nowadays delivering reliable, efficient and high-quality services. Consequently, surety bonds have diversified considerably in the last few years, addressing a wide range of risk situations. The two main categories of surety bonds available today are: contract surety bonds (provide financial security and construction assurance on construction projects by guaranteeing to the obligee that the principal will perform the work and pay subcontractors, workers and suppliers) and commercial surety bonds (guarantee performance by the principal of the obligation stipulated in the bond). These two main categories can be further separated in a wide range of subcategories.
A popular subcategory of contract surety bonds is represented by bid bonds (provide financial assurance that the contractor intends to enter into the contract at the price bid and provide the required performance and pre-negotiated payment bonds), while a popular subcategory of commercial surety bonds is represented by contractor license bonds (contractor license bonds are imposed by state law in order to obtain a license to form a certain business).
Whether you are interested in closing performance bonds, payment bonds, contractor license bonds, subdivision bonds, court bonds or various other types of surety bonds, it is very important to request the services of a prominent, respectable and reliable surety bond-services offering agency. With the help of a solid surety bond-services offering agency you will be able to enter in possession of your desired surety bonds rapidly, with less effort and in exchange for competitive rates.
More business, are applying for surety bonds, does this mean that the recession is over? In this last quarter surety applications went up for the first time in almost two years. This is a good sign for the economy, since bonds are required for new businesses as well as existing businesses. Construction bonds went up too showing that the construction industry is slowly coming out of a slump. Hopeful these trends will continue and America's economy prospers once more.
Who benefits from Bonds?
A surety bond is an unsecured loan in force to protect a third party or parties named the obligee. The State in most cases is acting as the obligee on behalf of its citizens.
The state requires bonds to be drafted to protect the individuals or companies that transact business with the principal bond holder. Most professional regulated businesses are required to satisfy this requirement before they can obtain a license. Contractors, Car Dealers, Mortgage Brokers are all required to obtain bonds. In some states Sales tax bonds are required for every business. Surety bonds have been around for thousands of years, they are the oldest form of Insurance.
Where do you get Surety Bonds?
In order to obtain a bond the principal must first fill out an application with a Surety Company. The next step is to find a Surety Company that will write the risk. Make sure that the Surety is licensed and rated for the State you're applying for the bond in. Your best option is to apply for your Surety Bond with Surety Agents. Look for Surety Agents that are not tied down to one company.
Underwriting for Bonds
Applying for a surety bond is similar to applying for a credit card or a loan. Surety Bonds are underwritten like how a bank would underwrite a loan. The Surety reviews the client's credit, personal financials, business financials, and experience.
If the principal has credit issues or if the financials do not meet the liquidity requirements the bond's rate will be increased.
You must have this requirement before the obligee will issue you a license. Check your credit before applying for the bond so you can have ample time to fix any issues. Depending on what type you need you may be required to present a business financial, personal financial and a resume.
Surety bond plays a major role in the development of the economy. In every business environment surety bonds are the most needed requirement to fulfill their aspects in a correct form. Nowadays, trends have been changed and people want to compile their requirements legally. So, every obligee requires their business to be done legally. Surety bond explains the essential factors and their requirements in the economy. The main purpose of issuing surety bonds is to give a guaranteed performance of contract. Generally, most of contractors enters in to a contract and do not complete the contract as per the terms and conditions of contract. Each party involved in the process has a defined responsibility and role with one another.
In case of breach of contract by the obligator, this surety bonds will be more helpful for the obligee to sue both principal and surety in the court of law.
Surety bonds are issued in different types and at different premiums as per the requirements of the obligee. Nowadays, surety bonds are needed in all business environments. A surety bond determines the responsibility and roles of different people who are engaged in the contract. When the person engaged in the business, he is obliged to obtain a license from the department. To obtain this license, the applicant is required to procure surety bonds of many kinds as per their business. Without license, no person can engage in the business, also without surety bonds no person can obtain license from the prescribed department.
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Axcess Surety
12288 S Mullen Rd, Olathe, KS 66062
(913) 318-4955
Website: https://axcess-surety.com
Google Site: https://sites.google.com/view/axcess-surety
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Therefore surety bonds describe the responsibility and role played in the economy. Surety bond classifies the main aspects needed for the business and provides a better solution to solve the problem. It offers responsibility to the people engaged as per their functionality and requirements. The roles and responsibility of surety bonds offers a better solution and benefit for the persons engaged. The roles and responsibility of surety bond determines the functionality and consideration of various activities involved in the process. The process will be made essential when it is organized by the contractor properly. It is the responsibility of the obligator to complete the contract within the time and contract price mentioned in the terms and condition of the contract.