A surety did not turn down your company. It turned down the file it was sent.
Bonding is underwritten like credit, not like insurance. Most declines are about what the surety could see, not about whether the work can be done. That is a harder thing to hear and a much better thing to know, because a file can be fixed and a reputation cannot.
Build the bond file The short answerThe financial statements, and how current they are
Work on hand against capacity, and the track record on that kind of job
A gap they have to guess at, or a surprise found late
Why do contractors get declined for a bid bond?
Usually one of five things: not enough working capital to carry the job, financial statements that are old or internally prepared, too much work already on hand for the capacity being asked for, no track record on that size or type of project, or a submission with holes in it. Only the first four are about the business. The fifth is about the paperwork.
Sureties are not pricing the chance of a fire. They are deciding whether this company can finish this contract if things go badly, and then whether the owners could make good on it if the company could not. That is a credit question. It gets answered from statements, work on hand, history and the people behind the company – roughly in that order.
Without capacity you cannot bid. The tender closes, the work goes to someone else, and the reason sits in a file nobody explained to you.
One is worth arguing with. One is not.
The fixable no
Statements are internal or a year old. Work on hand was never set out clearly. The trade history that proves you can do this job was in someone’s head instead of in the file. All of that is presentation, and presentation is repairable in weeks.
The structural no
Working capital genuinely will not carry the contract, or the balance sheet is upside down. No broker talks a surety past that. What a broker can do is say so early, and work on what would change it before the next tender.
The three numbers a surety starts from.
Working capital
Liquid assets against current liabilities. It answers the only question that matters to a surety – can this company pay for materials and labour on this job while still paying for everything else it already promised.
Work on hand
Everything already under contract, added up honestly. New capacity is granted against what is left, not against what the company could theoretically manage. Understating it does not help, because it comes out later and then the file has a credibility problem as well.
Who stands behind it
Sureties usually ask owners to indemnify personally. That makes the owners’ own financial position part of the assessment, which surprises people the first time. It is normal, and it is better known early than discovered at signing.
What contractors ask us about this.
We were declined once. Are we finished with surety?
No. Declines are common and most are about the file rather than the company. What matters is what changed since. A decline that was answered with better statements and a clear work-on-hand schedule reads very differently a year later.
Our statements are internal. Is that fatal?
Not fatal, and it does narrow the field and lower the capacity. Accountant-prepared statements are the single most common upgrade that moves a file. If bonding is part of the plan for next year, that is the thing to arrange now.
The tender closes in a week. Is that enough time?
It can be, if the file is complete. A week with everything ready is workable. A week spent chasing statements that do not exist yet is not. The clock is the reason to start before you need the bond, not after.
We have a facility already but it is too small. What now?
Increasing an existing facility is a different conversation from starting one, and often an easier one. It usually turns on the same three numbers, plus how the last few jobs actually finished.
Does a bond protect us if a subtrade fails?
A bond you require from a subtrade can. A bond you give to an owner protects the owner, not you. People routinely mix these two up, and the difference decides who is left carrying an unfinished scope.
Not the question you had? Build the bond file and set out your own situation in plain words. A licensed broker reads it and replies in writing.
Tell us what happened, and what the surety said.
We will tell you honestly whether it is the file or the numbers, and what would have to change before the next tender. Next business day, and usually the same day.