What your bonding agent
sees in your financials.

The short answer

A surety isn't an insurer betting on odds — it's a guarantor betting that you'll finish your jobs. So the underwriter reads your financials like a credit officer: how much liquid cushion do you have, how much of the business do you actually own, and do your jobs finish at the margins you claim? Those answers become your single and aggregate bonding limits.

Which means bonding capacity is an accounting outcome. Two contractors with identical trucks, crews, and backlog can have wildly different programs — because one shows up with clean, percentage-of-completion statements and a current WIP schedule, and the other shows up with a cash-basis P&L and a shrug.

Number one: working capital

Current assets minus current liabilities — the money available to absorb a bad month without missing payroll. It's the surety's north star, and the informal industry rule of thumb is that aggregate bonding capacity runs somewhere around 10–20× working capital, depending on the surety, your history, and everything else on this page.

But here's what surprises contractors: the surety doesn't use your working capital number. They compute analyzed working capital, discounting anything they doubt they could turn into cash:

• Receivables over 90 days — often cut heavily or to zero.
• Related-party receivables — loans to owners or affiliates: usually zero.
• Prepaid expenses and inventory — haircut or excluded.
• Under-billings — large ones treated skeptically, because chronic under-billing often hides losses.

A contractor with $800K of book working capital can easily analyze out at $500K — and their bonding program shrinks to match.

Number two: equity — and where it's going

Net worth tells the surety how much of the company's risk the owner actually carries, and the trend tells them what the owner does with profits. Earnings retained in the business grow capacity; heavy distributions that strip the balance sheet each year cap it. Sureties also watch for owner loans masquerading as equity and may ask to subordinate them. If growing bonded work is the plan, leaving money in the company is part of the price.

Number three: the WIP schedule — where trust is won or lost

The underwriter reads your WIP schedule the way a poker player reads faces:

• Profit fade. Jobs whose estimated margin shrinks from one schedule to the next. A little is normal; a pattern says your estimating — or your job costing — can't be trusted, and every projected margin gets discounted accordingly.
• Chronic under-billings. Occasional timing under-billing is fine. The same jobs under-billed schedule after schedule reads as unapproved change orders or unrecognized losses.
• Backlog vs. capacity. Enough profitable signed work to keep crews busy — but not so much that finishing it outstrips your working capital.
• Job history. Completed-job schedules showing final margins near bid margins are the strongest evidence in the whole package.

How to grow capacity on purpose

1. Get to POC-basis statements with a monthly WIP schedule — the price of admission for a serious program.
2. Defend working capital. Collect stale receivables (start with forgotten retainage), don't finance equipment out of cash, and time distributions with the balance sheet in mind.
3. Kill profit fade at the source — honest cost-at-completion updates every month, so margins move early and small instead of late and large.
4. Send your surety current, consistent information before they ask. Underwriters extend more capacity to contractors who never surprise them.