XL EagleBonding capacity (Surety bonding capacity)
Bonding capacity stands for Surety bonding capacity. Bonding capacity is how much bonded work a surety company is willing to guarantee for you. It is usually expressed as two numbers: a single job limit (the largest one contract can be) and an aggregate limit (the total of all your bonded work in progress).
Sureties set your capacity based on your financial statements, working capital, credit, experience, and track record finishing similar jobs. Stronger financials and a history of completed work generally raise your capacity over time.
Why it matters to a small contractor
Construction bids above certain sizes require bonds, and your bonding capacity sets a ceiling on which jobs you can chase. Work with a surety agent early, before you find the perfect bid.
Example
A small paving company has a single job bonding limit of about the size of its largest past project. To bid a bigger federal parking lot job, it works with its agent to provide CPA-reviewed financials and raise its limit.
Bonding capacity: common questions
How do I increase my bonding capacity?
Keep clean, accountant-prepared financial statements, build working capital, finish jobs on time, and grow job sizes step by step.
Does a subcontractor need bonding capacity?
Sometimes. Primes may require subs to provide their own bonds on larger subcontracts, especially in construction.
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