Surety bonds are three-party agreements where the surety (typically an insurance company) guarantees to an obligee (usually a government agency) that a beneficiary (usually a contractor or business) will fulfil its obligations according to the terms of a contract or statute. If the principal fails to fulfil its obligations, the surety will compensate the obligee for any financial losses incurred, up to the bond’s limit.

Surety bonds are widely accepted in the ANZ markets by all levels of government, as well as by public and private enterprises. As surety bonds are unsecured, they are typically only issued to beneficiaries who are able to demonstrate the following:

  • Minimum annual turnover of A$20 million.
  • Solid trading record with a level of continuous profitability.
  • Strong financial resources, including good equity.
  • Experienced and stable management.
  • Technical capability to deliver on contractual obligations.

There are various types of surety bonds, including:

  • Performance Bonds
  • Maintenance Bonds
  • Retention Bonds
  • Mining Rehabilitation/ Reclamation Bonds
  • Bid/ Tender Bonds
  • Advance Payment Bonds
  • Environmental Bonds
  • Supply Bonds

Surety bonds are commonly required by government agencies as a form of protection for consumers, taxpayers, and other stakeholders. They provide assurance that contracted work will be completed as agreed upon and offer recourse in case of non-performance or default.

Surety bond brokers such as BCS Broking are able to coordinate the surety bond process by establishing the surety bond facility, negotiating rates and fees on your behalf, managing annual reports, and training staff to optimise your use of the bond.

If you’d like to fast track your business growth through this innovative and powerful alternative to traditional bank guarantees and contract bonds, contact us today to arrange a confidential, no obligation call to see how surety bonds can help your business’ cash flow.

Want to know even more about surety bonds? Download our free brochure below.

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