Commercial bonds are a broad category of surety bonds that involve a commercial entity. The bonds provide a financial guarantee that the Principal (the party required to obtain the bond) will meet the obligations set forth by the Obligee (the entity requiring the bond).
Commercial bonds are often required for certain types of companies to obtain a license or permit. In other cases, a commercial business will require its customers to get a commercial surety bond to protect itself from financial losses.
Alcohol bonds are required for businesses that manufacture, sell, or warehouse alcoholic beverages. The bond provides a guarantee that the business will properly report and pay all required alcohol taxes and fees.Lottery and Raffle Bonds
Most states require an individual or business to post a lottery bond to be eligible to sell lottery tickets or operate lottery equipment. The bond provides protection to consumers by ensuring that the Principal complies with all regulations.Motor Fuel Tax and Distributor Bonds
Fuel tax bonds are required to be eligible to sell motor fuel. They are also required for distributors, suppliers, and importers of other various fuel types. The bond provides a guarantee that the fuel seller will remit their full tax liability to the IRS on time.Sales and Use Tax Bonds
Sales tax bonds are required for businesses that sell taxable goods. The bond guarantees that the business will file and remit its sales tax liability on time.Utility Deposit Bonds
Utility companies usually require a security deposit from new customers but may also offer the option to post a surety bond instead. Many customers choose to post the bond as it requires a smaller upfront investment. The bonds help protect utility companies from customers who fail to pay for their utility usage.
Commercial surety bond costs vary depending on the type of bond and the length of the bond's term. The Obligee sets the required bond amount and the surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium. Premium rates for commercial bonds typically range between 2% and 5%.
Some types of commercial bonds can be issued without an underwriter's review. Others are riskier and will require the surety company to evaluate your credit history and financial strength.
For bonds with more extensive underwriting, good credit can lead to lower rates, however bad credit will not affect your ability to get bonded as EZ Surety has various options for individuals with bad credit.
To obtain a commercial surety bond, you must research the type of bond that you need and its specific requirements. From there, you apply online for the bond through a surety company or agency.
The surety company will collect personal and business information such as names, addresses, social security numbers, and employee identification numbers. Their underwriters will use this information to review your financial strength and assess the risk of issuing you the bond.
After your application is approved, you will receive a surety bond quote with the bond premium. If you accept the quote, you pay the premium and the surety company issues you the bond.
EZ Surety makes it easy to obtain a variety of commercial bonds. You can complete our online application in minutes and many bonds are issued instantly.