What Is a Business Services Bond?
Business services bonds are a type of surety bonds that are often used by companies handling customers’ property or finances. While they are not always required by authorities, businesses choose to get bonded in order to ensure protection for both their customers and for their own security.
In practice, business services bonds protect companies from dishonest acts that their employees might engage in. If your employees engage in theft, embezzlement, or fraud with your customers’ property or finances, the bond is there to compensate the losses and protect your company.
That’s why being bonded is a strong sign that you are safe to do business with. Many private and business clients will not work with companies that do not have this extra layer of protection, as they prefer to hire a bonded company.
Questions about Business Services Bond
Who needs to obtain a business services bond?
Providers of different types of services whose employees have access to customers’ property and money often get a business services bond. Most commonly, these include cleaning companies, repair services, security companies, moving services, and child care providers, among others. In some cases, the bond is a licensing prerequisite for these businesses
These bonds are tremendously useful for resolving difficult situations with theft and fraud committed by employees while on the job. For businesses that have direct contact with their customers’ valuables, this can be a lifesaver. Additionally, getting bonded is a guarantee to the general public that you’ll uphold high professional standards.
How much does a business services bond cost?
The cost of your business services bond depends on the bond amount that is set by a governmental authority, or is based on the number of employees in your company, the amount of coverage you would like to obtain and which state you are located in. There is no unified bond amount required from business services in the country.
The bond price you will end up paying is a fraction of the total bond amount, and is determined on the basis of your credit score and finances. This is your bond premium.
How exactly is your bond price set? When you apply for a business services bond with a surety bond agency, they will primarily focus on your personal credit score. Applicants with good credit generally pay between 1%-3% of the total bond amount.
However, other factors can be considered in order to strengthen your application such as business finances, assets and liquidity, and professional experience. This is how they assess the risk of getting you bonded. With strong personal credit and solid finances, you can expect lower bonding rates.
For further information on how your bond price is determined, you can consult our surety bond cost guide.
Can I get a business services bond with bad credit?
Getting bonded with bad credit can be a challenge. Here at Lance Surety Bonds, we know how difficult it can be for businesses struggling with low credit scores, tax liens, bankruptcies, or civil judgements to get the business services bond they need. That’s why we operate our Bad Credit Surety Bonds program.
Bad credit bonding premiums are usually in the range of 4%-7.5%. Still, with us you are guaranteed a top bond rate. We have strong relationships with a number of A-rated, T-listed surety companies, which means that we can choose the best matching rate for your circumstances.
How do I get my business services bond?
Getting your business services bond has never been easier. Apply online today via our application form, and attach all necessary paperwork. We will deliver your exact bond price in no time.
Want to learn more about how bonding works? Our How to Get Bonded page is an excellent resource on the topic.
Don’t hesitate to call us at (877) 514-5146 if you have any additional questions, or need help with your bonding application. Our bonding specialists will be happy to assist you.
How are business services bond claims handled?
While business services bond are there to protect both your customers and help your business become licensed, your company can still be liable in event that there is a valid claim placed against the bond.
If a customer or someone you do business with decides to file a claim against your bond, they typically start by contacting your surety bond company regarding the complaint. If they plan on succeeding, the claimant will provide the amount of the claim along with any supporting documentation. The bond company will then promptly notify you, the bonded principal, of the claim. It is then up to you to work with the claimant to get the claim swiftly resolved.
If you’re not able or willing to resolve the dispute, the bond company will investigate to decide if the claim is valid. If you are able to provide documentation that sufficiently disputes the claim, the bond company may simply reject the claim. However, if they find you to be at fault, they will be required to pay the claim. If this happens, you are liable to reimburse the bond company.
Additionally, having a history of paid bond claims will likely make it very difficult for you to be bonded again in the future. Thus, it is very important to take claim activity seriously and work to get them resolved before a situation escalates.