In essence, credit is a trust that allows businesses to trade with each other on…
You have probably seen this phrase “licensed, bonded as well as insured” appearing commonly in business advertising. You know that the trait is desirable but do you even know what it means?
Most people usually know what licenses and insurances are but the term “bonded” appears pretty vague to them.
So what do you mean by the term ‘Bonded’? Why should even you be bonded? We’ll get to that soon in this article but before that let’s brush up our basics first for the sake of our explanation.
First things first: What does it mean to get BONDED?
In layman’s terms, being bonded signifies the fact that a business has simply purchased a surety bond to safeguard its financial assets.
Sometimes, the business might face situations where they are compelled to opt for a surety bond. But in most cases, they usually sign up for one on their own.
A surety bond increases the reliability of business. It assures the customer that his/her money is protected no matter what the circumstances.
Surety bonds tell the customers that their money is in safe hands. So naturally, trust builds up between the company and the customer which in something that can benefit both the company and the customer at the same point in time.
Even if a business breaks its contractual obligations, the customer knows that s/he will be reimbursed according to the obligations made in the contract. Thus, trust builds up between the two which is a good thing indeed.
A surety bond is made between 3 parties, and those three are:
• The obligee: A person to whom an obligation is owed.
• The principal: One who purchased the bond
• The surety: The one who backs the bond.
So that takes care of our basics then. Let’s move over to our main topic now.
Why should your business be bonded?
If you are a business entrepreneur who’s dealing primarily with things like real estates and other construction projects, you should consider getting yourself bonded without further ado.
• A bond helps to build up your business credibility by building up trust among your customers.
• A bond makes you reliable.
• A bond protects your financial asset.
• A bond can bring in more business simply by upping your brand value in the market. Always remember that credibility is directly proportional to that of your brand value. The more credibility you have, the more brand value you will have at the same time.
• A bond can make you a standout among the crowd.
So is there something not to like? Guess not!
Who are the people who should be bonded?
Most small businesses should get themselves bonded to fare well in the long run. But it’s not mandatory, and some can get away without using surety bonds in their dealing processes.
But for some high-risk businesses, surety bonds have almost become a part of their necessity because of their ability to alleviate high financial risks associated with them.
So these people should be bonded ASAP to be on the safer side:
a. Automobile dealers
b. Notary public
c. Building contractors – Contractors need to be bonded to prevent them from financial losses and further harassment
d. Janitorial servicemen – Janitorial businesses should do infidel bonds to prevent unethical employee behaviors
How much do they cost?
So now we have moved over to the most important part of our topic. How much do surety bonds cost?
The cost of a surety bond is dependent on a number of factors. And some of these are:
• The type of the bond (Is it a credit-checked bond or an instant-issued bond?)
• The financial history of the applicant
• The term length of the bond.
An instant-issued bond doesn’t require any form of credit check and is usually issued instantaneously. People usually have to pay a standard rate for this type of bonds.
A credit checked bond, on the other hand, is issued only after underwriting. Underwriting is the process in which the risk and the premium of the bond are assessed carefully before the issue of the bond. If everything looks good enough from the point of view of the surety, the bond is issued without further ado.
A credit-checked bond usually costs more in comparison to that of an instant-issued bond.
A surety bond can not only give you the peace of mind but can also give you a platform to bring in more business over time. So stop procrastinating further. Get BONDED immediately.
Latest posts by Katie Smith (see all)
- Why Should Your Small Business be Bonded? - July 30, 2017
- 6 of the Best Tips to Reduce Workplace Injuries - June 19, 2017
- Planning For Workplace Emergencies: A Brief Discussion - May 28, 2017