Financial Guarantee surety bonds are becoming more widely accepted as a form of financial security in lieu of a cash deposit. This type of bond guarantees payment to the Obligee for the agreed upon terms. The most common types of financial guarantee surety bonds are for:
• Utility deposits to a specific Utility company to open an account for utility service(s)
• State or local government tax deposits or payment guarantees for certain permits to be granted
• The guarantee of the payment of wage and fringe benefits to union workers per the terms of a specific Union’s agreement.
• Lease security deposits for commercial or governmental agencies.
This bond is not meant for repayment to investors or any other type of performance based financial obligation.
Since this bond is based on usage or individual financial agreements between the Principal and the Obligee (Utility Company, Union, State, etc.), the bond amounts will vary anywhere from a $100.00 bond for a small deposit to a near infinite amount for larger deposit requirements.
Generally, the rates for this type of bond will start at 2% for preferred applicants with strong personal credit and financial statements (if required) but are often rated between 3-5% of the required bond limit. For requests under $30,000.00, we can often provide an approval based on just the personal credit of the applicant(s). However, for the best terms, and for any bonds over $30,000.00, typically business and personal financial statements are required. Due to the financial nature of this bond obligation, it is considered a hazardous bond type and therefore usually requires a bit more underwriting review than any other standard license or permit bond.
In addition to the payment guarantee aspect of this bond requirement, there can also be language included in the Obligee’s bond form that may not be agreeable to a surety company. If you find yourself having a hard time getting one of these bonds placed, give us a call today! We have markets who can consider just about anything out there. Call us at 1-888-518-8011 or apply online today!