What is typically required from the principal to secure a surety bond?

To secure a surety bond, the principal is generally required to demonstrate a good financial history and relevant project experience. Surety companies assess the financial stability, creditworthiness, and past performance of the principal to determine the risk associated with issuing the bond. A strong financial history indicates an ability to fulfill obligations, while project experience provides assurance that the principal has the necessary skills and competence to complete the contracted work successfully.

This requirement helps surety companies mitigate their risk and ensures that the principal is capable of honoring their commitments, thereby providing protection to the obligee (the party requiring the bond). Other options, such as providing a business plan or legal entity formation documents, may be part of the overall application process but are not as directly related to the core financial responsibility and capability assessments that surety companies prioritize when underwriting a bond.