Ep. 629 The Evolution of Credit-Base Bonding Programs
Over that last 8+ years, credit-based bonding limits have grown from $400,000 to $3 million. Rancho Mesa's Alyssa Burley sits down with Surety Group Leader Andy Roberts to talk about the evolution of credit-based bonding programs.
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Host: Alyssa Burley
Guest: Andy Roberts
Producer/Editor: Megan Lockhart
Music: "Home" by JHS Pedals, “Breaking News Intro” by nem0production
© Copyright 2026. Rancho Mesa Insurance Services, Inc. All rights reserved.
Transcript
Alyssa Burley: You’re listening to Rancho Mesa’s StudioOne™ podcast, where each week we break down complex insurance and safety topics to help your business thrive.
I’m your host, Alyssa Burley, and I’m joined by Andy Roberts, Surety Group Leader with Rancho Mesa. Today, we’re going to talk about the evolution of credit-based bonding programs.
Andy, welcome to the show.
Andy Roberts: Thank you for having me, it’s wonderful to be back
AB: Well we are happy you are here. You recently wrote an article about how credit-based bonding programs have changed over the years. And, over that last 8+ years that you’ve been in the surety industry, you’ve seen credit-based bonding limits grow from $400,000 to $3 million. What factors have driven this dramatic increase in bonding capacity?
AR: So I think there's probably quite a few. But, you know, a couple of important ones kind of all tied together that really have driven this. You know, when you look at inflation over the last, you know, five years has really gone crazy and it's driven project sizes significantly higher with the scope of that project not being any different than what it would have been five years ago. So you factor that in, that quickly takes these credit-based programs that were a million dollars, that makes them pretty insignificant at that point. So you look at that and that's one driving factor. That coupled with... you know, when these programs first came out, they were predicated on the thought that personally, if an owner is paying their bills and doing well personally on the credit side, that's probably how they're going to run their business. And that's so how sureties kind of looked at it. And from a performance standpoint, that is held true. Like losses haven't been significant. And so that's given the sureties kind of the freedom or the comfort level to keep pushing these limits to try and keep pace. with you know inflation and increased project sizes so that they remain competitive you know I think one last thing that's pretty important too is that you know it's harder and harder to pick up clients when you're a surety company like once a contractor gets established with someone and if they're running their business really, really well they're not going to leave that surety that they're with so there's an incentive for sureties to try and pick up quality contractors quality owners earlier in their cycle when they're still maybe a little smaller or they're still kind of dipping their toe in because once they've established themselves, you're not going to peel them away from the surety that they're with unless there's an issue.
AB: Yeah, that makes sense. Now many contractors are surprised to learn they may qualify for significant bonding without providing company financial statements. How do credit-based surety programs work, and what are sureties looking for when evaluating an applicant?
AR: So they're pretty simple. We'll ask for a one-page application with the breakdown of ownership, social security numbers. Sureties will do a soft. credit poll to kind of check your credit score, see if there's any bankruptcies or anything like that that might preclude you from qualifying for these programs. And that's the main driving factor. To get to the full $3 million limits, though, they are going to want to see that you have completed a project of probably a million and a half or so. That's kind of usually our gauge of like, we'll give you two times your biggest project size. So to get to that full $3 million, you need to have done something that doesn't need to be a bonded project, just something that your company has previously done and that should kind of get you up to that limit and give you like a three million dollar aggregate bond program.
AB: So that's interesting because if I'm a construction company owner, I can't just go out and get a job that's maybe a $2 million job if I haven't even done a $1 million job or something smaller than that, right? You want to see a progressive increase in the size of the projects.
AR: Absolutely. And I mean, because there is a big difference when if you come to me and say, oh, I've done a $50,000 project, there's a big difference in managing that versus a $3 million project. But I'm working on one right now where they did $700,000, and we've approved them for a $2 million bond program just off credit. So it's not a hard, fast rule. It just kind of depends on the project and their history. But it really gives contractors that might be maybe newer or have split off from a bigger company a gateway to pick up projects that are a little more significant for their business.
AB: Okay. Now, you mentioned that inflation competition among sureties and strong program performance have all contributed to the evolution of these programs. How do these changes create new opportunities for contractors, particularly those looking to grow their businesses?
AR: So, you know, one of the things that's really beneficial about these is it's rewarding owners that have done a good job. on the personal side and you know they're running their business the right way but they might not have like you know the financial presentation yet to call for what we used to have to do to get to a $3 million bond program. Now this is kind of giving them their freedom to take that next step out of projects that are less than a million dollars and jump into these little bit bigger projects that their business might be more comfortable even doing. They just didn't qualify for because they didn't have the presentation or a whip present, you know, all these long laundry lists of things we would ask for to get above a million dollars have not gone away, but there's ways to. push that off a little bit, which I think is really beneficial for people that are running really nice businesses and that can do this kind of work.
AB: So in this scenario, it's really important to be working with someone like yourself, a broker who understands the business and can figure out the best way to maybe get the bonding for those a little bit bigger projects and kind of set your client up for, okay, we're going to be able to, over time, get you bigger and bigger bonding capabilities.
AR: You know, most of these sureties, they're all a little different in their appetite within these programs. This is kind of the generic of how they work. But it's also important to kind of sit down and say, hey, you know, we're going to stay in this program. You know, maybe we need two bonds a year at $2 million. Okay, that's our plan now. You qualify for this. You can use this program pretty easily. But it's like, also, let's sit down and if you're, hey, I'm going to grow. I want to take these next steps to get out of these programs. It's important to sit down and understand what's the plan going forward because these programs are kind of designed to help you grow out of them and get into a more standard program. And it's important to kind of work with someone that understands what those requirements are going to look like once you're ready to get out of them so that you're ready to go to the $4 million, $5 million, $6 million projects.
AB: . All right. So Andy, if listeners have questions about their bonding program, what's the best way to get in touch with you?
AR: So I can be reached at (619) 937-0166, or by email at aroberts@ranchomesa.com.
AB: All right. Well, Andy, thanks for joining me in Studio One.
AR: It was great being here. Thank you for having me.
AB: Thank you for tuning in to our latest episode produced by StudioOne™. If you enjoyed what you heard, please share this episode and subscribe. For more insights like this, visit us at RanchoMesa.com and subscribe to our weekly newsletter.