Will having a bond affect my ability to secure other financing or loans?
When contractors are looking to finance their projects, the ideal option is a bond. However, many contractors will worry that the bond they get will affect their ability to secure other financing or loans. This article will discuss why this isn’t the case and how to secure a bond for your project.
What Type of Financing is A Bond?
A bond and a loan differ slightly in the type of financing they offer. Whereas a loan is just that, a bond is technically a debt security, which is similar to an IOU. Borrowers issue bonds from investors that provide the financing for a certain amount of time. These providers are typically the government, local authority, or municipality.
Typically, a bond lasts until the work is completed to a satisfactory standard or any defects are made good. They act as a form of financial protection for the contractor in a road or sewer construction project.
Can I Still Secure Loans or Other Financing if I Have a Bond?
Yes, you can still secure loans or other financing if you have a bond. Bonds are not listed as liabilities on the developer’s balance sheet, so they don’t affect their ability to secure a loan as much.
How to Secure A Road & Sewer Bond
The easiest way to secure a bond is through our online application form. When you do so, the underwriters will ask for some financial information about your company, such as balance sheets, financial history, and credit checks.
For Road and Sewer Bonds, underwriters require three sets of accounts, including the latest management accounts, the bond wording, and a signed application form.
| RS Bonds work with housebuilders throughout the entire process of obtaining surety bonds, and we will ensure that the entire process goes smoothly. Fill in our application form for more information. |
Benefits Of Road & Sewer Bonds
Road and sewer bonds are not just a legal obligation for developers, they also provide a huge amount of benefits that make them so beneficial. These benefits are, but not limited to;
Risk Mitigation – Road and Sewer Bonds help to mitigate risk as they provide both the government and developers with a financial guarantee. If developments do not adhere to the strict standards that local governments have, then they can use the surety bond to cover the costs of bringing the development up to the correct standards.
Legal Compliance – Surety bonds such as Road and Sewer Bonds help to ensure that developers are legally obligated for roads or sewers. This is because these bonds are put in place to ensure that government or water authorities are compensated if a development does not meet its legal obligations or standards.
Payment Protection – Road and sewer bonds provide payment protection to local and water authorities to guarantee that work is completed and that they are covered if a developer fails to meet their standards.
Specialist Road & Sewer Bonds from RS Bonds
RS Bonds are the only UK company that is dedicated solely to Road and Sewer Bonds, which means we can guarantee the lowest-priced quote, and ensure that your entire application process goes smoothly. We work with an exclusive panel of underwriters to ensure our customers get the best surety bond for their project.
Fill in our application form today to speak to one of our dedicated account managers about your bond requirements.
