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A Performance Surety Bond provides a financial security to the beneficiary, the project principal, against a contractor not performing, or defaulting, on a contract during the construction phase or defects period.
A Performance Surety Bond provides a financial security to the beneficiary, the project principal, against a contractor not performing, or defaulting, on a contract during the construction phase or defects period.
The bond facility limit is typically $2m plus, against which individual performance bonds are issued.
Performance Surety Bonds are widely accepted by the private and public sectors, (including federal, state and local government departments), as an alternative to bank guarantees.
There are a number of key benefits of surety bonds across a range of industry sectors.
The key benefits are:
Release your cash for growth (i.e. take on more contracts), acquisitions or debt reduction
Unsecured, no tangible asset or collateral required
Improves your balance sheet and liquidity
Allows for greater flexibility and opportunities
Works alongside your existing bank facilities
Risk mitigation, less exposed to bank credit decisions or reviews
The typical industry sectors are:
Construction
Engineering
Mining
Oil and gas
Building
Other types of Bonds are:
Bid / tender bonds
Advance payment bonds
Cancellation of import/export licences
Off site materials bonds
Who can qualify for a Bond?
Typically a turnover in excess of $20 million
Must have a minimum net tangible worth of $3m
Positive cash flow and working capital
At least 3 years of continuous profitability
Operating for at least 5 years
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