Surety Bond Premium Financing
If you need a surety bond, you'll be expected to pay the premium before you get it. But what happens if you can’t afford the entire premium upfront? You can get premium financing! (Our shameless plug: SuretyBonds.com offers an exclusive premium financing program to our clients.) This can be especially helpful for applicants whose bad credit adversely affects their surety bond rates.
So how does surety bond premium financing work, anyway?
Surety financing breaks up your premium into smaller, more manageable payments. It works as a three-party agreement between you (the bond purchaser), the finance company issuing the loan and the insurance company underwriting the bond.
Premium financing is only available on cancelable bonds. So how do you know if your bond is cancelable? It depends; you'll need to contact your surety agent to find out. Because financing is issued only on cancelable bonds, there's no risk of default if you miss a payment. The finance company will simply cancel your agreement and get its money back.
How much does premium financing cost?
Financing companies require a down payment of 25% of the premium. The other 75% is paid over the course of the bond's duration (usually one year) at an interest rate of 10-15%. The first two months' payments must be paid upfront.
Why do bond companies provide premium financing?
Surety companies offer premium financing because they know you need your bond now. This means your bonding needs can be fulfilled in a timely manner. Even if you don't have the necessary funds at your disposal right now, you can still get your bond right away.
Still have questions?
You can always call one of our surety bond specialists at 1 (800) 308 4358 between the hours of 8 a.m. and 7 p.m. CST Monday through Friday, or check us out online 24/7. Our Surety Bond Answers forum is also a great place to ask a question or see if we already answered yours!