Who can supply a Performance Bond?
The two main suppliers of Performance Bonds are banks and surety companies.
Banks – will generally take 100% cash collateral security for the duration of the contract. If you have that amount of cash in credit, this is a great option, as the bank will pay interest on the cash amount, which will probably pay for the bond itself.
The downside to this arrangement could be a serious affect on your business’ cash flow for the duration of the contract. An overdraft facility can often be set up to resolve this but these usually need to be secured with personal guarantees or property. As such, using a bank could end up being more expensive and prohibitive.
Surety companies – will usually mean cash flow will not be affected, and the cost of the bond will therefore stand apart from company banked finances.
The surety market, however, is international, so care should be taken with the details. You should be especially aware where personal guarantees are requested. Should the product pay out, surety companies will seek recovery from individuals. We would always recommend you get specialist advice on any surety product before purchase. As with most financial products, the devil is in the detail.
Why arrange a Performance Bond with BJP?
With nearly 20 years’ experience helping our clients to place performance bonds, we are perfectly positioned to make sure you’re looked after by a surety specialist, whatever the nature of your project.
Did you know we also provide Property Developers Insurance? Whether you are professional developer running multiple projects or a house owner in the process of refurbishing or extending your house, BJP can assess your situation and offer a collection of covers best suited to your needs under a Property Developers Insurance.
We can help you find a Performance Bond to suit the unique needs of your contract.