A construction bond line approves contractors to purchase multiple surety bonds up to an aggregate value and sets a ceiling for the amount of coverage they can get for one job. Learn more on how construction bond lines work in this complete guide.
What Are Construction Bond Lines?
A construction bond line or bonding capacity is a pre-approved limit for contractor bonding. This expedites the bonding approval process for licensed contractors working on multiple projects.
How Do Construction Bond Lines Work?
When you open a construction bond line, you will receive two numbers. The top number is the single limit and the bottom number is the aggregate bond limit.
- Single Limit: The maximum amount you can bid on any single contract.
- Aggregate Limit: The total amount of work you can have on hand at one time.
What Are the Benefits of Construction Bond Lines?
Pre-approved bonding capacity confirms that you are financially stable and trustworthy. This can strengthen your bid offers and quicken the bonding process. Bond lines also help ensure project completion by limiting how many projects a contractor can take on at one time.
- Strengthen bid offers
- Expedite the bonding process
- Prevent overcommitment
Why Was My Bond Denied When It Was Under My Bonding Capacity?
There are many reasons why your bond might have been denied even though you had bonding capacity. Some sureties require contractors to prove jobs are completed before they will approve a new one. This ensures you don’t exceed your aggregate limit.
Surety underwriters may also decline a bond for your protection if the job is overly complex or out of scope based on previous or current workload. This could be due to a lack of experience or documentation provided for the job at hand.
If you have questions about your application, our surety experts are happy to help — just call 1 (800) 308-4358.
How to Increase Your Bonding Capacity
You may expand your business and need a larger construction bonding capacity. To do so, you’ll need to provide personal and company financials with an updated portfolio. This will show that your company is financially stable enough to increase the bond line with evidence from recent projects and experience.
Underwriters will review your request to determine if you can increase your limit and by what amount.
How to Lower Your Construction Bond Rate
Improving your personal and business financials is the quickest way to help lower your bond rate. Increase your working capital and limit company loans to demonstrate growth and stability. Learn more about surety bond pricing factors and how to lower your bond costs.
Get Your Construction Bond
SuretyBonds.com is licensed to issue construction bonds in every state with the fastest delivery and most affordable prices in the industry. Check out our Construction & Contract Bond Guide to apply for the bond you need.
