- December 29, 2016
- Posted by: Surety Bond Experts
- Categories: Financial Guarantee Bond, Surety Bonds
A financial guarantee bond is a guarantee that the surety will pay an exact amount if the principal fails to perform their contractual obligation. Some examples of a financial guarantee bond are tax bonds, Medicare and Medicaid bonds. Because of the complexity of these bonds, they can be extremely hazardous and hard to be approved for and, therefore, are carefully underwritten.
Some requested information which may be asked for during the application process are, but not limited to:
- A commercial bond application, which provides general information and helps the surety bond producer determine the bond amount, etc..
- Business Financial Statements which include, but are not limited to, balance sheets, statement of cash flow and income statements.
- An Owner’s Financial Resume is a complete financial history of the owner or people overseeing the business. This is asked for in order to evaluate the competency of the applicant.
- Owner’s Personal Financial Statements are asked for because, similar to the business financial statements, it helps to evaluate the competency of the owner or people overseeing the business.
- Current Bank Statements help to evaluate net worth of the principal. The most efficient and easy way to do this is to provide bank statements.
- A copy of a license or permit may also be asked for. In some cases, commercial bonds will need proof that the principal has already acquired the necessary permit or license before the bond can be approved.
Financial Guarantee Bonds are considered highly risky and require extensive financial documentation. Extensive financial documentation will be required (which includes an application as well as the owner’s business and personal financial information and possibly a copy of a license or permit).
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