What are Colorado Surety Bonds?
Colorado surety bonds are sometimes needed when you apply for business license. Surety bonds are three party agreements which involve you or your company, a surety, and another party called the obligee. They typically guarantee performance of a contract or that you will follow the rules which govern your state license. Surety bonds are, in general, a promise to pay when something goes wrong like defaulting on a public construction contract.
Apply for your Colorado Surety Bond
Most bonds are approved as soon as your application is received.
Who needs Colorado Surety Bonds?
Car dealers, freight brokers, and contractors are just a few of the businesses who need Colorado surety bonds. As mentioned above, surety bonds are often required when registering your business with the state. These bond types are often referred to as license bonds because they are associated with your state license.
Bonds are also required for the performance of certain state contracts. These bonds protect the state of Colorado and its tax payers. They ensure that a tax payer funded project is completed according to the contract. This bond type is called a performance bond.
The last type of surety bond in Colorado is used in the court system. They offer financial guarantees in certain types of court cases such as appeals, injunctions, and probate.
How do I get a surety bond in Colorado?
Here are the steps to get a surety bond in Colorado:
- Complete the online application;
- Receive your bond cost;
- Pay for your bond; and
- Print your surety bond.
Most surety bonds can be issued and printed within minutes of being approved. Original bonds are then mailed to your address using the mailing option of your choice. Next day delivery is available for urgent requests.
How much does a Colorado surety bond cost?
Your bond cost is based on your credit score in most cases. An estimate of your cost is listed below:
- Excellent credit – .5%-1% of the bond amount needed;
- Good credit – 1%-2% of the bond amount needed; and
- Bad credit – 3% and above for the bond amount needed.
For example, let’s say you need a $20,000 surety bond. Your cost would range from $100-200 for excellent credit, $200-400 for good credit, and $600 and above for bad credit. You can find out your exact cost by completing our surety bond application.
Colorado License Bonds
License bonds in Colorado may be needed to get a state business license. A good example of one is the $50,000 Colorado car dealer bond. This bond type is needed by all car dealers within the state. It protects your clients from claims of financial harm caused by your dealership. Claims can occur when your dealership breaks the rules which govern your dealer license. Examples of claims which may be covered by your bond are selling the same car to two individuals, not providing clear title, and other deceptive business practices. However, keep in mind that surety bonds are different from insurance. You will be required to reimburse the surety company for any costs it incurs including the amount of the claim.
Performance Bonds in Colorado
Colorado performance bonds are usually needed by contractors performing public projects. They may also be needed by companies entering into private contracts. Their main purpose is to ensure a contract is completed according to its terms. The terms often include a specific time for completion, cost, and scope of work. The surety bond could pay the bond holder if the contractor defaults and can’t complete the contract as agreed upon.
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