Q: What is a surety bond?
A: A surety bond is a promise to pay one party (the obligee) a certain amount if a second party (the principal) fails to meet some obligation, such as fulfilling the terms of a contract. The surety bond protects the obligee against losses resulting from the principal’s failure to meet the obligation. For more information on what a surety bond is, please visit the following booklet online.
Q: What type of surety bond does the Bonding Assistance Program cover?
A: The Bonding Assistance Program covers bid bonds (guarantee that a contractor will enter into a contract if awarded the bid), performance bonds (guarantee that a contractor will perform the work as specified by the contract) and payment bonds (guarantee that a contractor will pay for services and materials).
Q: Does this program write surety bonds?
A: This program does not write surety bonds and does not participate in the surety company’s underwriting procedure. The Bonding Assistance Program is a source of collateral to mitigate risk to the surety company.
Q: How does the Bonding Assistance Program work?
A: The Bonding Assistance Program provides collateral to the surety that could mitigate the surety’s risk and result in issuance of required bonding capacity.
Q: I haven’t gotten my contractor’s license yet. Are there any programs that can help me get my license?
A: Yes, the Louisiana Contractors Accreditation Institute, a partnership between Louisiana Economic Development, Louisiana Community and Technical College System and the Louisiana State Licensing Board for Contractors, offers access to training across the State with focus on expanding understanding of the construction industry.
Q: How do I qualify for the Bonding Assistance Program?
A: You will need to apply for the Small and Emerging Business Development (SEBD) Program in order to qualify for the Bonding Assistance Program and then contact your bonding agent to start the underwriting process with the surety company.
Q: What surety companies and surety agents can I contact after I get SEBD certified?
A: The surety company and agents that signed on for the Bonding Assistance Program can be found here. If you already have a surety agent, your agent can contact a surety company for approval to work with the Bonding Assistance Program.
Q: Can this program help me if I am able to get limited bonding capacity?
A: Yes, the bond guarantee could help the surety increase your aggregate bonding capacity.