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The bid is due Friday. Your bond shouldn't be the holdup.
- Contract Bonds — Bid, performance & payment bonds that keep your projects moving.
- Commercial Bonds — License & permit, court, and fidelity bonds for any requirement.
- Advocated Underwriting — We package your financials so sureties say yes, fast.
A bonding program, not a one-off transaction
- Financial statement review & packaging for sureties
- Single & aggregate bond capacity planning
- Bid, performance & payment bond placement
- License, permit & court bonds for TX & OK
- Fast turnaround when bid deadlines are tight
If a bid is due, call (469) 756-8776 first. 4J Insurance Brokerage is an independent brokerage in Frisco, Texas, licensed in Texas and Oklahoma. Bond approval is a credit decision made by a surety company and is always subject to underwriting.
A bond is not an insurance policy
This is the distinction that changes everything downstream. An insurance policy is a two-party contract where the carrier expects to pay losses and prices them in. A surety bond is a three-party agreement between you as principal, the party requiring the bond as obligee, and the surety company. The surety is not expecting to absorb loss. It is guaranteeing your performance, and if it pays, it expects to be reimbursed by you under a general indemnity agreement.
That is why bonds are underwritten like credit rather than like insurance. The surety is asking whether you can finish the job, not how likely you are to have an accident.
The bonds Texas businesses actually need
How surety underwriting actually works
Sureties talk about the three Cs: character, capacity and capital. In practice, the file is built from a small number of documents, and how complete they are determines both how fast you get approved and how much capacity you are given.
- Character. Personal and business credit, industry reputation, litigation and lien history, and whether prior obligations were met. Credit matters, and it matters most on smaller bonds where there is no financial statement to look at.
- Capacity. Whether you have the people, equipment and experience to do this specific job. A contractor with a strong record on eight hundred thousand dollar jobs is a different risk on a four million dollar job.
- Capital. Working capital and net worth, read from financial statements. The depth of statement matters: internally prepared, compiled, reviewed and audited each unlock progressively more capacity.
What the surety will ask for
- Business financial statements, usually the last two to three fiscal years plus a current interim
- A work-in-progress schedule showing each open job, contract value, cost to date, estimated cost to complete and billings
- A completed jobs schedule for the same period
- Personal financial statements from the owners
- Bank line of credit information and reference letters
- The contract, bid documents and required bond form
- A signed general indemnity agreement from the company and, in most cases, the owners personally
The work-in-progress schedule is the document that decides most bond files. It is where a surety sees whether jobs are being billed ahead of cost or behind it, and whether profit fade is showing up. A contractor with a clean, current WIP schedule gets larger capacity faster than one with the same financials and a schedule that has to be reconstructed.
Single job and aggregate capacity
A bonding program is expressed as two numbers. Single job limit is the largest individual contract the surety will bond. Aggregate limit is the total value of bonded work you may have open at once. A contractor can be well inside the single job number and still be declined because the aggregate is full. Knowing both figures before you bid is the difference between chasing work you can bond and work you cannot.
Why sureties decline, and how to fix it
- Negative or thin working capital. Usually the single most common reason. Retainage classification and shareholder loans often move this number more than owners expect.
- Weak or unavailable financial statements. No interim, no WIP, or statements too old to rely on.
- Profit fade. Jobs that finish materially below the margin they were bid at.
- Personal credit issues, tax liens or unresolved judgments.
- A job that is too large, too far away, or outside the type of work you have completed before.
- Unwillingness to sign the indemnity agreement, or a spouse who will not sign where the surety requires it.
- Concentration risk, where a single owner or a single project represents too much of the backlog.
Most of these are fixable with lead time. Cleaning up the WIP schedule, moving to a reviewed statement, resolving a lien or restructuring working capital before bid season is materially easier than doing it the week a bond is due.
Related business risks worth reviewing together
A bonded contractor is almost never a monoline account. These are the coverages that normally sit alongside a bonding program, and why.
General liability
The same contract that requires the bond will usually require specific liability limits, additional insured status and primary and noncontributory wording. Sureties also want to see that the liability program is sound.
Workers' compensation
Crews on a bonded job create employee injury exposure, and most owners and general contractors require evidence of workers' compensation before mobilization.
Commercial auto
Trucks, trailers and equipment moving between jobsites, plus employees driving their own vehicles to site, sit outside general liability and need a commercial auto program.
Umbrella and excess
Contract-required limits frequently exceed what the primary policies carry, and an umbrella is normally the efficient way to reach them.
For the wider construction program see contractors and construction insurance, or start at the commercial insurance practice hub. Terminology is defined in the surety bonds glossary.
4J Insurance Brokerage is a broker. It does not underwrite bonds or extend credit. Bond approval, capacity and rate are determined solely by the surety company, subject to underwriting, and are not guaranteed. Descriptions on this page are general summaries and do not amend any bond form or indemnity agreement.
What a real bond broker delivers
What is a surety bond, and how is it different from insurance?
A surety bond is a three-party guarantee: the surety backs your obligation to a third party, called the obligee. Unlike insurance, if the surety pays a claim, you're expected to reimburse it. That's why underwriting centers on your financials — and why how your file is presented matters so much.
How much does a surety bond cost?
Most commercial bonds run roughly 1–3% of the bond amount per year, depending on credit and financials. Contract bond pricing depends on job size and your financial strength. We shop multiple sureties so you see the best available rate — not just the first quote.
Can I get bonded with less-than-perfect credit?
Usually, yes. Specialty surety programs exist for challenged credit, typically at a higher rate. We'll tell you honestly what's achievable today — and build a path back to standard markets as your financials strengthen.
How fast can I get a bond?
Many license, permit, and smaller contract bonds can be issued within days once your file is complete. Larger performance bonds take longer because underwriters review financial statements. Facing a tight bid deadline? Tell us up front — that becomes the plan.
What do surety underwriters actually look at?
Working capital, net worth, bank credit, your track record, and the specific job — plus how the file is packaged. Sureties say yes faster to a well-organized submission. That packaging is exactly what we do for you.
What's the difference between bid, performance, and payment bonds?
A bid bond backs the bid you submit. A performance bond guarantees you'll complete the job per the contract. A payment bond guarantees your subs and suppliers get paid. Public projects typically require all three — and we place them as one coordinated package.
What documents does a surety need to approve a contract bond?
For a contract bond the surety normally wants two to three years of business financial statements plus a current interim, a work-in-progress schedule, a completed jobs schedule, personal financial statements from the owners, bank line of credit information, the contract and bid documents, the required bond form, and a signed general indemnity agreement. For small license and permit bonds the file is usually credit only.
What is my bonding capacity, and how is it decided?
Capacity is expressed as two numbers: a single job limit, meaning the largest individual contract the surety will bond, and an aggregate limit, meaning the total bonded work you may have open at once. Both are driven by working capital, net worth, the quality of your financial statements, your completed job history and the accuracy of your work-in-progress schedule. You can be inside the single job number and still be declined because the aggregate is full.
Why do sureties decline bond requests?
The most common reasons are thin or negative working capital, financial statements that are missing, stale or too informal, profit fade on recent jobs, personal credit problems, tax liens or unresolved judgments, a job that is materially larger or further away than anything completed before, unwillingness to sign the indemnity agreement, and backlog concentrated in one owner or one project. Most are fixable with lead time.
What is a general indemnity agreement, and do owners sign personally?
The general indemnity agreement is the contract under which you agree to reimburse the surety for any loss it pays under a bond. It is signed by the company and, in most cases, by the owners personally, and often by spouses where a surety requires it. It is the reason a bond is a credit instrument rather than an insurance policy: the surety expects to be made whole.
