The Three Cs We're Actually Looking At

Character: Will You Do What You Said

Character is the least quantifiable of the three and the first thing an underwriter forms an opinion on. It's a read on whether the people running the company, and bidding this specific job, have the experience and track record to back up the number on the bid form.

• Ownership and key management's direct experience in this trade and at this project size
• Completed-project history: on-time, on-budget, no unresolved claims or liens
• Bank references and trade or supplier references
• Any prior bond claims, litigation, or license actions, and how they were resolved
• Whether the team that bid the job is the team that will actually run it

Capacity: Can You Actually Do This Job

Capacity is operational, not financial: it's whether you have the people, equipment, and bandwidth to execute this contract on top of everything else you already have running. The main tool we use to evaluate it is your work-in-progress (WIP) schedule.

• Current WIP schedule: contracts in hand, percent complete, and remaining backlog
• Whether this project fits inside your available bonding capacity without overextending you
• Equipment, labor, and subcontractor relationships adequate to the scope
• Whether your estimating and project-management numbers are accurate and current
• How this job compares to the largest single job you've successfully completed

Capital: Can You Absorb It If Something Goes Wrong

Capital is the cushion. Sureties translate your balance sheet, principally your working capital (current assets minus current liabilities) and net worth, into a bonding program, then size it against your track record and the nature of the work. A thin balance sheet caps your program no matter how strong your character and capacity are, which is why capital is usually where a program gets built up or held back.

• Working capital and net worth trends over the last two to three fiscal years, not just the most recent number
• Quality of assets: how much of "capital" is real cash versus related-party receivables or WIP overbillings
• Personal financial strength of the owners who've signed the indemnity agreement
• Liquidity to cover payroll and subcontractors through a slow-pay stretch on this job
• Whether current WIP shows over- or under-billing, and what that says about your cash flow

How It Comes Together

These three factors don't get scored independently. They combine into a bonding program: a single-job limit for the largest contract we'll bond you on at once, and an aggregate limit for everything you can have bonded at the same time. Our job at Machaen Insurance Agency is to package your file, financials, WIP, references, and history, so the numbers tell the right story the first time an underwriter sees it, rather than getting read as a decline before we get the chance to explain the context.

If you want the deeper detail on either side of this: how contractors qualify for higher credit limits and the most common reasons applications get denied both build directly on the framework above.