The risks involved in construction are great. Investors will buy a property and hope that the work they do will help them make money. If they make the right decisions, it is possible to earn a lot of money. Mistakes in the decisions can quickly send an investor into bankruptcy. The risks that are associated with trying to improve properties are one of the reasons that many people shy away from it. They do not want to see a simple mistake ruin them.
One way that investors protect themselves is through the purchase of bonds that can be used during the construction process. There are many different types of bonds that can be used on construction projects. Most of the different types of bonds can be called surety bonds. The surety bonds protect the investor and anyone else on the project in the event that the money runs out. The bonds will pay for the work that has been done and the materials that have been used. One type of bond that is used in this way is called a site improvement bond.
What is a site improvement bond?
A site improvement bond is a type of surety bond. It is used to ensure that a project will be completed in the way that was agreed upon. It is used when contractors are doing improvement on a site instead of working on new construction. The bond can be used to pay the people that are the victim of fraud or illegal activity on a project. This type of bond is used by contractors who have bid on a project.
What is needed to get a site improvement bond?
A site improvement bond must be applied for. It is similar to a loan and is not an insurance policy. It does provide the people involved in a site improvement project with the knowledge that the work will be done properly and the people will be paid what they have earned.
Because it is similar to a loan, the application must be filled out by the contractor. The company that is issuing the site improvement bond will perform a credit check on the individual or business that is applying for it. They will base the fees that they charge for the bond on the credit history that is discovered. There is no guarantee that an individual or business will qualify for the site improvement bond. They will have to know where to get it and what information will be required to get it.
How do you apply for a site improvement bond?
In order to apply for a site improvement bond, the first step is to find a business that offers this product. Most of the businesses that offer surety bonds will have a site improvement bond. It is a good idea to check with a few companies to get the best rates on the bond. It will be necessary for anyone applying for this bond to gather certain documents and information that will be needed.
- Financial statements of the business for at least 3 years
- Personal financial statements of the principals of the business
- Bank statements
- Corporate and personal tax returns
- Partnership agreement of articles of incorporation
- Project information.
These are some of the basic things that the bond companies will require. There are some bond companies that will require other paperwork and there may be some companies that will require less.
Speed is of the essence when it comes to construction projects. In order to avoid any delays it is best to have the site improvement bond in place as soon as possible. The contractors and businesses that can accomplish this are the ones that will be able to get the most business.