5 Challenges Shaking Up Construction & How Surety Can Help
For a construction business owner, surety bond access isn’t just a compliance checkbox—it’s a strategic asset. The strength and resilience of the surety industry safeguard project pipelines and protect partnerships. But equally important is choosing the right surety partner.
Here are five of the biggest challenges facing construction firms—and what they mean in relation to growing and retaining surety credit:
1. Cash Flow Stress -Inflation and High Interest Rates
A relationship-driven surety—one that brings a deep understanding of an owner's business and the construction cycle—can be the difference between surviving a cash flow squeeze and facing insolvency. Surety credit is a reflection of their business health. A strong, aligned surety relationship strengthens their reputation with project owners, lenders, and trade partners—and keeps them on the job site rather than in litigation.
The right surety will:
• Work with owners proactively to navigate tight cash flow scenarios and keep projects moving.
• Help owners avoid courtrooms by pursuing common-sense, collaborative claims resolutions—minimizing legal costs and preserving working capital.
• Support long-term growth by evaluating the merits of their business, not just rigid ratios or industry benchmarks. It's that flexibility, along with a focus on net worth vs. working capital, and pooling of equity, that sets Merchants Bonding Company apart.
2. Material Costs & Delays
The impact of tariffs on key construction goes beyond pricing; tariffs can cause longer lead times, unpredictable purchasing patterns, shipping disruptions, and even quality control issues. All of which can derail schedules and budgets.
The right surety will:
Help contractors leverage smart contract language (think escalation clauses), and welcome secure reliable supplier relationships, and proactively plan projects. Demonstrating your control over their supply chain risks inspires greater surety confidence.
3. Labor Shortages
Clearly, there’s performance bond risk without enough qualified workers
The right surety will:
Work with an advisory team (surety, legal, financial) to ensure contractors' systems, processes, and leadership can scale with new opportunities. There’s an opportunity for good managers with access to labor to demonstrate they can manage through this stress.
4. Complex Contracts and Risk Transfer
Alternative delivery methods like design-build, CMAR, and joint ventures are now the norm, not the exception, shifting more risk to contractors.
The right surety will:
Help contractors understand their obligations, document clearly, and price risk appropriately. If they’re entering into new contract types their surety should be part of the conversation early on.
5. Big Opportunity - Big Expectations
Public projects bring money and growth opportunity, but come with a very different set of expectations than a private owner project.
The right surety will:
Help be the guide to shifting gears from private to public works in a strategic and sustainable way that is not just opportunistic.
As a partner in business, a surety underwriter understands contractors' risks and will help them proactively manage them, protecting and growing the business's bonding capacity and positioning the company for long-term success.
How do I get a Surety Bond?
Surety bonds are issued by Merchants Bonding Company through insurance agents. Contact your local insurance agent or use our Find an Agent tool. They will guide you through the process, informing you of what documents and information are needed by the surety (Merchants Bonding Company) to underwrite your bond.
All information provided is subject to change.