Case Studies
Securing Bonds for Contractors Others Turn Away
When Traditional Surety Markets Decline — How We Helped a Contractor Secure Their Performance Bond
In today’s construction market, many contractors encounter difficulties obtaining a Performance Bond, even when they have a strong reputation for completing projects successfully.
Traditional surety markets can sometimes decline an application, often because of the structure of the business or underwriting requirements that don’t fit the contractor’s specific situation.
At Surety Bonds and Guarantees, we regularly help companies overcome these challenges by approaching the right markets and presenting their case correctly.
The Situation
A mid-sized contractor had been awarded a £5 million design-and-build contract that required a 10% ABI Performance Bond under the JCT form.
Despite the company’s solid trading history, the contract was being delivered through a newly formed special purpose vehicle (SPV). Several surety providers declined the application because the SPV had no trading record and limited balance sheet strength.
The Challenge
The main concern for underwriters was the security position and absence of standalone accounts for the SPV.
Most sureties requested additional guarantees, including personal guarantees from the directors and cross-company indemnities, which the contractor wanted to avoid to protect their wider group interests.
This is a common issue: many sureties assess each entity in isolation and apply strict underwriting parameters. However, these don’t always reflect the full picture, particularly where a wider trading group, strong parent company, or secure contract payments exist.
Our Solution
Our team reviewed the contractor’s structure and consolidated the financial performance of the wider group. We demonstrated the group’s historic profitability, pipeline, and ability to deliver projects of similar scale. We then approached an alternative surety market known for its flexibility and experience in assessing non-standard structures.
By carefully presenting the submission, focusing on contract security, payment terms, and the employer’s credit quality, we were able to secure approval for a 10% ABI Performance Bond supported only by a corporate indemnity. No personal guarantees or cash deposits were required.
The entire placement was agreed within 48 hours of submission.
The Outcome
The contractor was able to satisfy the employer’s requirements, maintain banking facilities for cash flow, and proceed with the project on time.
Since then, they have returned to us for subsequent tenders, knowing we understand how to position their risk effectively with the right surety partners.
This case shows that even when traditional markets decline, a specialist broker with strong market relationships and technical knowledge can often deliver a solution that others cannot.
Need Help?
If you’ve been declined by a surety or need a Performance Bond under complex circumstances, contact Surety Bonds and Guarantees on 02476 017646 or submit your enquiry through our website.
We’ll review your case and provide indicative terms quickly and transparently.