Securing adequate forms of collateral can be a useful option for emerging contractors to obtain surety credit in cases where certain aspects of bonded obligations fall just outside general underwriting guidelines.
Common Forms of Collateral
Real Estate. Merchants considers a variety of options for real estate collateral and utilizes several tools to verify equity, creating a fluid process without causing delays in the bonding process.
Irrevocable Letter of Credit. In some cases, Merchants can provide surety credit in exchange for an Irrevocable Letter of Credit (ILOC) from an approved lending institution. The ILOC is an agreed upon percentage of a specific bonded project or overall bond program.
Cash. In lieu of an ILOC, Merchants may also accept cash which will be held in a separate deposit account in the name of the owner.