We all are aware of the definition of Surety Bonds. These are a kind of insurance required by the government or other authorities to allow the principal to carry out certain business activities. Surety bonds are bought and backed by the Principal. There are many alternatives available in the market that can be used in the lieu of the Surety Bonds. All these alternatives have some types of disadvantages associated with them.
Some of the reasons why surety bonds are better than its alternatives are mentioned below
Collateral security: surety bonds do not require any collateral security. Thus, your assets can be solely used for the operating and developing the business. The other options require 100% collateral to provide the guarantee.
Costs: The Surety bonds are issued for a reasonable premium. The cost of surety bond depends upon a number of factors such as the reputation and financial credentials of the applicant. Other alternatives can be expensive in comparison with the Surety Bonds.
False claims: in other methods such as irrevocable letter of credit false claims can be made. Surety Bonds do not involve these risks. Surety companies conduct a detailed scrutiny before allocating bonds to the different applicants.
Aggrandized defaults: other methods require the assets of the business as a collateral security. It leads to decreased efficiency due to low working capital. This may lead to frauds and bankruptcy.
We are a leading Surety provider in Georgia. You can apply online for surety bonds with us.