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What is the underwriting process?

A. The underwriting process assesses the contractor’s capability and capacity to perform the contract, as well as the contractor’s character.  The purpose of underwriting is to determine whether there is a reasonable expectation that the contractor can successfully complete the contract.

Among other areas addressed during the underwriting process with a Surety Company or Agent are the following:

(1)  personal financial status of the business owners/IRS tax forms, etc.
(2)  company financial status / balance sheet and income statement. [CPA prepared statements may be required, depending on the quality of statements prepared in-house, and the size of the prospective contract.]
(3)  bank & credit information
(4)  a schedule of contracts on hand and the stage of completion
(5)  resumes of key business owners
(6)  a business plan

The Surety Company or Agent may decline to issue a bond without an SBA guarantee.  If, however, the Surety Company applies to SBA for the bond guarantee, completion of the following forms is necessary:

(1)  SBA Form 994, Application for Surety Bond Guarantee Assistance
(2)  SBA Form 994R, Application – Rider, American Recovery and Reinvestment Act
(3)  SBA Form 912, Statement of Personal History
(4)  SBA Form 994F, Schedule of Work In Process

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