Small Business Administration Paycheck Protection Program

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Never has so much been given with so little information or effort…as part of the CARES Act, Congress has enabled the SBA to issue 100% federally guaranteed loans to businesses and entities in operation on February 15, 2020. These loans have been given to small business concerns, non-profits, individuals operating as sole proprietorships, eligible self-employed individuals and Tribal concerns through participating banks with no credit risk to the banks.

Considering the enormity of the project and related processes, the SBA has done and continues to do an outstanding job of working with the participating banks in establishing the processes for determining and getting the money in the bank account(s) of literally millions of companies under what is being called the PPP (Paycheck Protection Program). The maximum loan is the average monthly payroll costs incurred during the 12-month pre-funding period multiplied by 2.5 (250%). The maximum loan is around $10 million. The terms and conditions are historically unheard of for government loans (grants):

  1. NO GUARANTEE – No personal guarantee required.
  2. NO COLLATERAL REQUIREMENT NON-RECOURSE – The SBA has no recourse against any individual shareholder.
  3. NO FEES – The SBA will not collect a fee from the recipient of the loan.
  4. COMPLETE PAYMENT DEFERMENT RELIEF of principal, interest and fees for a period of not less than 6 months and not more than a year.
  5. FOR AMOUNTS NOT FORGIVEN, the maximum loan term in 10 years, the maximum rate is 4%, zero loan fees and no prepayment fees.

Based on the rate in which the economy seems to be rebounding, the PPP has served us all very well.

The Power of Joint Ventures in the Future of FDOT Construction Work

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Joint Ventures have been an extremely collaborative approach to undertaking and completing the tremendous amount of road and highway (FDOT) work that has been done in Florida over the past 25+ years. The size and complexity of many of the projects has required the joint efforts of two or more construction firms. A few examples would be I-4 in Orlando, a tri-venture; the 826/836 Interchange in Miami-Dade County, a tri-venture, and of course the 395 Signature Bridge contract in Miami-Dade County, a joint venture.

In some cases, contracting entities have joined forces to spread the financial risk or the various parties may come together for organization, technical or manpower advantages. Whatever the reasons for the various contracting entities uniting, the success of the projects completed under this contracting method is indisputable. It is likely that we will continue to see an escalation of joint venture work in our marketplace over the next decade as projects continue to grow in size and complexity.

COVID-19 AND ITS IMPACT ON THE SURETY CREDIT MARKET

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COVID-19 has significantly impacted all credit markets, both directly and indirectly, including the Surety Credit marketplace. Based principally on supply chain issues, employee availability and productivity as well as bank credit availability, surety markets are re-evaluating the credit they have been willing to extend – both on a general and specific account basis.

The underwriting criteria and understanding between a contractor and their surety may have been quite predictable in the past; however, our financial world has radically changed and at this point in time, nothing in that regard can just be assumed any longer or taken for granted.

In these challenging times it more important than ever to have a “backup surety lines of credit” for any account that depends on surety credit as a means of obtaining work. Now, like no other time in history, has a backup line of surety credit made more business sense.

Talk with a surety bond specialists or financial advisor to learn more about how they, can help you navigate the uncertainties of the novel coronavirus and discuss the best way to secure a backup line of surety credit for your business.

How to Pick Insurance Company for Contracting Business

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If you are entering into the contractor’s business, the first thing you must do is start looking for suitable contractors bonding and the insurance companies. Contractors typically require a number of bonds before starting with a project. These include license and permit bond, bid bond, performance bond, and payment bond.

Why you need the right surety company?

Reputation: When you select a surety, you should go with a reliable and reputable name. Remember, the surety will also represent you. Any obligee will trust a bond that comes from a well-known reputable company. The obligee will have the assurance that the surety is thorough in its investigation and hence, your bond will be deemed more reliable.

Support: A surety also acts as your protection if a dispute does arise. A good surety company will investigate a claim thoroughly and agree to pay up only if the claim is seen as legitimate. The more is their commitment to a fair investigation, the better are your chances. The surety becomes your support in this case.

How to pick a surety company?

You can follow the following steps when picking a contractors bonding and insurance company:

Research: You can check the top companies online. You can also ask your peers or others in the industry for reference. Check their website thoroughly, especially their procedures and bonding conditions. If you have a low credit score, check that the company will still consider your application. If they do, check their conditions.

Cost comparison: Do a cost comparison between different surety companies to find the one that fits your budget. You can ask for a quote. Some companies offer this service for free, while some will charge a nominal fee. Instead of going with the cheapest, find out the standard cost.

Fill the form: Fill the form on the website and submit it. You may also have to attach certain documents or send these by mail. You may also be asked to submit these when the application is approved. Once you’ve filled the application, the contractors bonding and insurance company underwriter will evaluate it and fix a cost.

Finally, you may have to sign an indemnity agreement and pay the fee to buy the bond.

Understanding Commercial Bonds

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Commercial bonds are so named because these are usually required from commercial organizations. These bonds are meant to ensure that businesses follow ethical practices and consumers are protected. You can get a commercial surety bond Florida from a licensed surety company.

There are different types of commercial bonds that can be broadly divided into:

License and permit bonds: These bonds are usually required from professionals who need a license to work, such as contractors, plumbers, and electricians. The license and permit bonds ensure that the licensed professional follows the codes and regulations of his/her profession. It is meant to ensure that the consumer’s interests are protected.

Public official bonds: These bonds are typically required to be held by public officials in positions of power particularly where the office deals with sensitive information. This includes judges, mayors, sheriffs, and treasurers. The purpose of the bond is to see that the official does not abuse its power. The public official bond is very important to ensure that the government works smoothly and in an ethical manner.

Court bonds: Broadly speaking, court bonds include judicial and fiduciary bonds. Judicial bonds are associated with litigation and both parties may be required to file a bond to ensure they carry out the court’s judgment. Fiduciary bonds are related to probate court and are required where a person is entrusted with the care of another’s property. The bond ensures that the fiduciary will carry out his/her duties faithfully.

Miscellaneous bonds: These are the commercial surety bonds Florida that do not fit under any other category. This includes alcohol bonds, warehouse bonds, fuel tax bonds, auto dealer bonds, lottery bonds, auctioneer bonds, utility bonds and more. Broadly speaking, these bonds are meant to ensure that the principal follows rules and regulations of his/her field.