Before the price for your surety bond is determined, many different things are examined to figure out what the rate will be, and to make sure that you can be approved to have a bond issued. The company that will issue the bond will definitely closely examine your credit history, your experience in your industry, and your financial documents and reports.
The process of examining all of this information is called underwriting, and it’s very similar to the process of underwriting for a loan. The rate you get for your bond will depend on various things, including the factors listed above, how stable the underwriters perceive your business to be, the kind of bond you’re requesting, and the company’s policies.
Typically, companies that issue bonds are looking for a credit score in the high 600s in order to approve you for a bond. They also check to make sure you don’t have any outstanding debts that have been
turned over to a collection agency, and that your business is on track to continue making money in the future – at least according to your financial documents.
Sometimes surety bond companies also want you to have five times your bond amount in equity or net worth. This varies by company and by state, but you should expect the surety bond company you apply with to be interested in your equity amount compared to the bond amount you apply for.
These are just a few things to expect after you apply; all of these things will affect your bond issuance and the bond rate.