A surety bond is often required to guarantee that a contract will be performed as promised, such as completing a construction project. The two basic requirements for a surety bond will be your good character and sound financial conditions.

Pre-Qualification

A surety bond applicant must go through a pre-qualification review, during which time information is gathered indicating the applicant's ability to meet current and future financial obligations.

Checklist

A checklist of items included in the pre-qualifying process includes: the applicant's education and work history; a business plan for the applicant's company; and a business continuation plan indicating what will happen if the applicant becomes unable to work.

Financial Statements

The pre-qualifying process will be followed by a thorough review of the applicant's financial condition, including submission of audited financial statements prepared by an independent certified public accountant.

Indemnity

A successful applicant will also have to provide an indemnity to the surety that commits the applicant to cover the surety for losses attributable to the applicant's failure to complete any contractual obligations pertaining to the bond.

Surety Relationsip

An approved applicant should realize the importance of maintaining an ongoing relationship with the surety company to preserve the applicant's bonding capacity.

Source:

The Surety and Fidelity Association of America: What is Suretyship?

Surety Information Office: How to Obtain Surety Bonds