Surety bonds offer compelling advantages as a type of security against contract default when compared to guarantees offered by banks. The demand for surety bonds as a financial instrument as opposed to merely a statutory requirement has been gaining traction.
Most businesses with a leased facility or office space will have some sort of security deposit requirement. This information can be found disclosed in CPA prepared financial statements or available online for publicly traded clients, or otherwise via a conversation with the company’s CFO or controller.
There are key differences between the two instruments:
Surety bonds offer beneficial alternatives:
Often a letter of credit is a firm requirement, and a beneficiary may insist a letter of credit since it is more favorable to the beneficiary. Many times, a bond will be accepted. For the above reasons, it is always a smart idea to ask if posting a surety bond in lieu of a letter of credit is an available option as it has proven to be an advantageous alternative.
Questions about the benefits? The AssuredPartners Construction & Surety Team is available to navigate the differences and find the solution for you. Reach out today.
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