What does "bonding capacity" refer to?

Bonding capacity refers to the maximum amount of bonds a company can secure, which is a critical concept in the surety bond industry. This capacity reflects the financial strength of a contractor or business and their ability to take on projects while providing a guarantee to the project owner that the work will be completed as per the contract requirements.

The bonding capacity is determined based on several factors, including the contractor's financial history, experience, creditworthiness, and the nature of the projects they undertake. It serves as a limit set by the surety for the amount of bonding that can be issued, allowing contractors to grow their business while managing risk effectively. Understanding bonding capacity helps contractors know how much work they can accept and fulfill while ensuring compliance with surety requirements.