Expertise in a Continuously Evolving Sector
The surety needs of technology companies can vary dramatically, from a small portfolio of bonds to support license obligations up to multi-billion dollar facilities supporting a vast array of global obligations. The Bond Exchange team has worked with technology companies of all sizes to provide surety solutions that support the growth and complexity of the industry.
Common Surety Bond Needs for Technology Companies
Performance and payment bonds
Performance and payment bonds are some of the most common bonds needed regardless of sector. While most technology companies do not require a high volume of performance and payment bonds, these can be essential when entering into government contracts or when a new office campus is being built and a city or country requires these types of bonds to guarantee completion of public improvements.
License and Permit Bonds
These are some of the most common bond needs for any company and vary widely based on the nature of the business. License bonds are often required as part of state or federal requirements to obtain a specific license (i.e., finance lender, mortgage broker or motor vehicle dealer). In most cases, these bonds are relatively easy to obtain and are essential to remaining in compliance with the underlying license requirements.
Money Transmitter Bonds
Money transmitter bonds have become increasingly more common among technology companies with the increase of online transactions. These bonds guarantee that the money transmitter (also referred to as money remitter bonds or money services bonds) will comply with each state's regulations regarding the transmission of money. The requirements vary by state and can be as little at $1,000 and as much as $7 million.
Court bonds are a common need among technology companies, often due to litigation. The increase in lawsuits related to intellectual property among technology companies has created some of the largest bond requirements the surety industry has faced. When a defendant in a case has a judgment entered against them, they often choose to appeal to a higher court. In order to do so, the defendant must post a bond with the court guaranteeing that the judgment will be paid if the appeal is lost. The magnitude of these cases can be significant, sometimes requiring bonds with values in the billions. The Bond Exchange team has experiencing placing multi-billion-dollar bonds and is well versed in all types of court bonds.
Financial Guarantee Bonds
Surety bonds can be used to secure a variety of different types of financial transactions including insurance deductibles, leases, tax obligations and utility deposits to name a few. These bonds can vary widely in value but are a helpful alternative to other types of guarantees (i.e., letters of credit or bank guarantees).
In order to move goods in to the U.S., a company must post a bond with the U.S. Department of Customs and Border Protection (CBP) to guarantee the payment of duties and taxes on imported goods. This is referred to as an import bond and is one of the most common types of customs bonds. There are a number of other types of customs bonds which can be required of technology companies, including drawback, international carrier and custodian of bonded merchandise. A technology company may also need a carnet bond if products are taken out of the country for trade shows and later returned once the trade show is complete.
Letter of Credit Replacement
With increasing global bank regulation, there has been a contraction in the availability of cost competitive letters of credit or bank guarantees provided to technology companies. At the same time, surety bonds are becoming more widely accepted within the US and especially outside of the US. This has created an opportunity for technology companies to replace existing letters of credit with surety bonds. This often frees up capacity within a company's credit facilities and typically reduces the cost of meeting security requirements. The Bond Exchange has worked with numerous technology companies to evaluate and successfully replace letters of credit for our clients.
Please complete the form below with an overview of your surety needs and a member of our team will promptly reach out to help you.