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What is a Retention Bond

What is a Retention Bond?

It's common for retentions to be requested with construction contracts which is usually 5% of the contract value. Retention Bonds provide the employer with the same level of comfort as the retention but freeing up the money for the contractor's cash flow.

The placement of bonds and guarantees through the surety market, as alternatives to retentions or bank guarantees, can help companies by keeping bank facilities available to meet cash flow requirements.

So Why Buy a Retention Bond?

In certain contracts the employer may request that they hold up to 5% of the contract value (a retention) for a period of up to 12 to 24 months. You will then have to wait for the funds to be returned at the end of the making good of defects period. Cumulatively these can amount to a significant amount of money being held back which could affect your cash-flow, however we can offer an alternative solution in the form of a Retention Bond.

By purchasing a Retention Bond and releasing the full value of the contract can be highly beneficial to the Contractor.

Retention Bonds can be purchased at the start of a contract or even retrospectively freeing up the capital earlier than originally forecast.

Why use Surety Bond and Guarantees?

We specialise solely in the Surety market, having a vast wealth of experience and contacts to call upon we are able to source highly competitive quotations from multiple providers ensuring our clients receive the best possible terms.

Bonds and guarantees are written promises to pay for direct loss or damage suffered by a third party as a result of a breach of contract. Many types of bonds and guarantee are available for almost any area of work.

Enquire today to see how Retention Bonds can help your business release any tied up capital. Telephone: 02476 017646

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