Bond is such a common term that everyone has heard but do everyone know what exactly the bond is? How it works and what is the importance of bonds in every business and individuals?
A bond is a debt instrument for the one who issued a bond to the holder. It works as a security debt where the bond issuer owes a debt from the holders. Bonds provide a guarantee of performance and financial investments. There are different kinds of bonds which are used in every type of business as it provides security.
Here are some different kinds of bonds which are important for your business –
It is a type of bond which provides the surety for the performance and payment. It is issued by the insurance companies. It also guarantees the work completed in time by the contractor.
Whenever a job is presented to the winning bid, a payment and performance bond is required to assure the project completion. And if a contractor fails to construct as per the bond then the owner receives compensation for all his monetary loss.
Construction bonds –
It is also a type of bond which provides surety and is used in construction to protect the client against losses that can be caused by the contractor due to incomplete construction or failure to meet the specifications of the contract. To issue a construction bond, three parties involvement requires- a contractor, an owner, and surety company.
Fast track contract bonds –
It is a contract bond which is different from the construction bond. It eliminates the lengthy process of bond application which is associated with the other contractor bonds. It is mainly used for the mall contractors where a bond is issued in 24-48 hours.
Notary bonds –
Notary bonds are typically used when you have someone in your team or in office and you want to set up him as a notary. A notary is a person which is authorized legally and will signs witness or approve on documents.
Dishonest bonds –
Whether a small business or medium-sized, every business needs dishonest bonds to protect the companies from the dishonest employees. Especially small business is adversely affected by such dishonesty.
Licensing bonds –
Many companies and licensed individuals required bonds for their license. Even the licensed professionals require bonding. An insurance claim adjuster needed to bond the companies.
Bonding is very important for each and every company. It provides surety, security and protects against defaults and disruptions to the company.