While there are some similarities between Surety Bonds and an Irrevocable Line of Credit (ILOC), there are some significant differences that make surety bonds more cost-efficient and beneficial to prospective customers. This article will briefly explain surety bonds and ILOCs are, how they work, and what makes them different from one another. After reading this article, you will understand the benefits to posting a surety bond, and will be able to see how they can actually save you money.
What is a Surety Bond?
Surety Bonds (often misspelled as
Over the past decade, the surety bond industry has seen some significant changes that have changed the industry landscape, particularly when it comes to high risk bond programs. Companies that were dropped by their bond companies as a result of bad credit, etc, have been forced to find new bond agents in order to help them attain new surety bonds. This created a slew of challenges for agents, as they now have to find markets for these customers with credit problems, and will typically require significant collateral in order to write a bond for someone with bad credit. To serve these types of principals, Bad Credit Surety Bond Programs came into play.
High Risk = Higher Premium: Before there were high risk bond programs, underwriters of surety bonds would only write bonds for customers (or principals) that presented little to no risk of having a claim arise against them. In other words, they went after a
