Notary Surety Bond: Must-have Tool For The Smart Businessman

2007-03-08 10:33:40

( Financial )



Surety bonds are an all important financial management instrument in the rising global business climate. They are also considered a concrete guarantee of performance. Surety bonds supply companies with the flexibility they need through off-balance sheet credit which is more advantageous than letters of credit or other financial tools. Surety bonds are also used to remedy intricate credit problems, enhance cash flow and free up credit sources. Surety bonds play an important role in world economics, primarily in ensuring the full implementation of construction projects.

What surety bond are
A surety bond is a signed accord wherein an entity, the surety, binds itself to another entity, the obligee, to be responsible for a third entity, which is the principal. In the event the principal fails to fulfill his obligations – as specified in a contract, the surety will answer for the principal.

Notary surety bonds, on the other hand, are surety bonds which state governments require to ensure that a principal adheres to governing regulations. Each state has their own notary surety bonds forms wherein the principal is obliged to provide the forms of notary surety bonds.

How much surety bonds cost
Surety bonds vary in price depending on the principal and on the type, size and duration of a project. However, these amount to only two percent or less, of the contract price. When the notary surety bonds are specified in the contract documents, the principal is responsible for obtaining the bonds. The principal also includes the premium amount of the bond in the bid which is payable upon execution of the bond. Should the contract amount change, the premium will be altered to fit the contract price. The prices of surety bonds and notary surety bonds are based not necessarily on the bond size, but on the value of the contract.

Obtaining surety bonds
Surety bond companies, mortgage surety, surety companies and bond surety companies can provide you with the appropriate application forms for obtaining surety bonds. Once you have completed the form, it is sent back for review and approval within the same day. The time it takes to acquire your bond is dependent on several factors including the company underwriter's availability. The most significant being the time it takes for you to provide the data needed. The sooner you provide the information needed, the sooner it is sent to the bonding company for approval.


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