The Purposes of Surety Bonds in Hudson, NY

by | Jun 14, 2019 | Attorney

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Most people will never need surety bonds in Hudson, NY because this is a specialized type of bond. A surety bond is required for licensing a new business or to begin a large construction project. It is more of an insurance policy than a bond.

A Guarantee

This bond protects the business owner, customers, investors, and municipalities against major financial losses if a business fails or a contractor cannot complete a development or building project. The bond varies in cost based on the type needed, the credit history of the business owner, and the company that provides surety bonds in Hudson, NY. A large project, such as the building of residential development, requires a bond to refund investors should the project not be completed.

An example is a construction company that goes bankrupt in the middle of building a condominium complex. A surety bond is used to compensate the investors and prevent the owner from being sued for lost money. This bond may be expensive for the contractor but will avoid lawsuits and court costs.

Bonds for Licensing

A surety bond for the licensing of a new business indicates that the business is backed by a bond company. It is an ideal way to establish confidence with customers and stand apart from other new businesses that serve as competition. The purpose of a bond in this case is also to protect suppliers, employees, and companies that have sold or rented the new business equipment or furniture.

A new restaurant opens on the West side of town. Before the first diners arrive, the business has already accrued debt. Ingredients, commercial kitchen equipment, and dining room decor have either been purchased or rented via an invoice. A surety bond will cover debts if the building burns down suddenly, a customer gets food poisoning and the food safety inspector shuts down the restaurant, or if flooding causes massive damage to the restaurant.

Select an Experienced Bond Company

Researching companies is wise before securing a surety bond. The rates, services, and degree of coverage will vary greatly between bond types and bond companies. Search for companies in the local area for more information and then schedule consultations with the best candidates.

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