With the new year approaching, contractors across Canada gear up for bidding season. This year brings fresh opportunities, and having the right bonding facility can be a game changer. Ferrari & Associates recognizes that bonding is crucial for your business. Our goal is to help you secure a bonding facility that enhances your reputation as a reliable contractor.

What is a Bonding Facility?

A bonding facility is a pre-approved limit that allows contractors to obtain essential bonds quickly. Kari Davis, our Director of Surety, explains, “It allows a contractor to secure bid, performance, and payment bonds without going through an extensive approval process for each project. This means you can pursue projects with confidence, knowing you have solid financial backing.”

A bonding facility streamlines the bidding process. It frees you to focus on delivering quality work rather than getting stuck in administrative tasks. Kari emphasizes, “A bonding facility provides the stability that clients seek, reinforcing your financial reliability. This ultimately leads to more opportunities and stronger client relationships.”

Michael Di Pinto, our Vice President of Construction Insurance, adds, “With an established bonding facility, contractors can enhance their marketability. They become dependable partners ready to take on larger, more complex construction projects.”

How Does a Bonding Facility Work?

Establishing a bonding facility involves working with a surety provider like Ferrari & Associates. Our surety team assesses your financial health, past project performance, management experience, and capacity to handle new work.

Based on this evaluation, the surety sets a bonding limit. This limit includes both a single project limit (the maximum bond size for one project) and an aggregate limit (the total limit for multiple projects).

Once your bonding facility is in place, you can secure bonds quickly. For example, if you’re bidding on a project requiring a bid bond, you can request it from us without lengthy approvals. If you win the project, you can also obtain performance and payment bonds with minimal delays. This speed allows you to focus on what matters most: delivering excellent work.

However, you must stay within your approved bonding limits. If you take on additional projects outside these limits, you may need to request a facility increase, which could involve a reassessment by our surety team.

Why is a Bonding Facility Important?

A competitive edge – Many public projects and large private contracts require bonding. Having a bonding facility qualifies you for these opportunities. It signals to potential clients that you meet high reliability standards. This can set you apart during competitive bidding seasons, where contractors without bonding may not even be considered.

Saves time and resources – Once your bonding facility is established, you won’t need to start the underwriting process for each project. You can pursue multiple projects seamlessly, saving time and allowing you to concentrate on your work. Less paperwork means more productivity.

Builds trust with clients – Clients prefer bonded contractors. A bonding facility shows your stability, financial health, and commitment to fulfilling contract obligations. When clients see the backing of a reputable surety, they feel confident in your ability to deliver as promised.

When are Bonding Facilities Most Commonly Used?

In Canada, bonding facilities are especially prevalent during key periods, such as:

• Public project bidding seasons
• The construction peak in spring and summer
• Economic stimulus periods
• Large private sector projects
• Renewable energy initiatives

Bonding facilities are reviewed annually. During this review, our surety team reassesses your financials, project performance, and overall capacity. A strong track record can lead to increased bonding limits, while setbacks may necessitate adjustments or additional requirements.

How Ferrari & Associates Can Help

Ferrari & Associates empowers contractors like you to strengthen your business. Our bonding specialists will work closely with you to secure a facility tailored to your needs and goals. Whether you’re a growing firm or an established contractor, we provide the support you need to pursue larger contracts and grow with confidence.

For more information about a bonding facility for contractors, contact us today! To start the surety quote process, click here.

*The information provided on this page is for information purposes only and should not be taken as insurance advice. For actual insurance advice, please contact Ferrari & Associates at 1-888-467-8989