• WHAT IS SURETY?
A surety bond is a contractually binding guarantee to pay the direct or contracted loss suffered by a breach of contractual or legal obligations. ‘a surety bond is a formal, legally enforceable contract between a first party (principal, beneficiary or obligor), a second party (the client/applicant or obligee) and a third party (the surety provider, bank, bonding company or insurance company) and whereby the surety guarantees payment of a specified maximum sum and/or to otherwise compensate or indemnify the obligee against damage or loss caused by the actions or failure to perform of the obligor.’ Surety is able to take on a number of forms and as are not definitively described in our products link.
• HOW DO I APPLY FOR SURETY?
In all cases, we require the applicant to first download, complete and return to us an Enquiry Form in order for us to able to make a simple assessment of whether or not your project or enquiry is applicable for surety. Once your Enquiry is received, we will within 24 hours attempt to contact you to either progress to the next step or to decline taking your application any further. If we proceed with your Enquiry then the next step will involve us sending to you a detailed and security numbered Application Form which must be fully completed by you and returned to us in the prescribed format along with any required supporting documentation
• IS SURETY APPLICABLE TO MY COMPANY OR MY PROJECT?
This is a difficult question to answer generally as each enquiry and application is assessed on its own merits and therefore the best method of establishing whether or not surety is applicable to your company or your project is to download, complete and return the Enquiry Form to us.
• CAN I APPLY FOR SURETY AS AN INDVIDUAL?
Unfortunately we are only able to accept applications from registered public and commercial corporate entities and we are unable to accept or consider any personal enquiries or applications.
• WHAT DOCUMENTATION WILL I NEED TO PROVIDE?
Initially you need only to download, complete and return the Enquiry Form. Thereafter if we proceed with your enquiry, we will provided you with a detailed Application Form which should be returned to us together with an non- exhaustive list of required information, which, for example would normally include a detailed project summary and supporting documentation, including indicative letter of offer for funding (where applicable), your company’s accounts (preferably audited) and balance sheets for the last 2 years plus cash flow forecasts for the project in respect of existing companies or projected balance sheets and cash flow forecasts in respect of special purpose vehicle established specifically for a project. A full and comprehensive list of additionally required documentation will be provided to you after your application has been assessed and during processing by us and as may further be required by the surety provider’s underwriters.
• WHY IS SO MUCH FINANCIAL INFORMATION REQUIRED?
Surety if offered is in a sense similar to a line of credit and in this your application will be assessed by us as to your company’s and its directors financial good standing (but not limited thereto) and additionally your application will be subject to a rigorous underwriting criteria by the surety providers underwriters who may underwrite on a group or consolidated basis where your company is owned by another company or is part of a larger group of companies
• HOW LONG WILL THE PROCESS TAKE BEFORE I AM OFFERED TERMS?
This is a difficult question to answer generically as each application and project have varying levels of complexity and diversity which have to be individually vetted and due diligence completed upon. Where finance is already offered by a funder specifically for your project, then we do endeavour to process your application within a two week period, and notify you as to its success or failure subject to all the required information being provided by you in a timely manner
• AM I CERTAIN OF OBTAINING SURETY?
All applications are assessed individually by both Shabus Securities Corporation and then additionally and subsequently by the surety providers underwriters, and all applications must meet the minimum underwriting, due diligence and risk criteria. In some cases terms may only be offered subject to additional terms and conditions being met. Unfortunately in other cases we may be unable to secure and offer of terms for your project
• WHAT IS THE DIFFERENCE BETWEEN SURETY AND INSURANCE?
Surety bonds as guarantee contracts are not terms of, or contracts of insurance. Surety bonds are offered and made available on terms of recourse so that in the event the surety provider has to or is required pay out to the beneficiary/employer in terms of the bond it has issued if the bond is called up due to default by the beneficiary/employer then in such event the surety provider is able and entitled to seek reimbursement of the same from the applicant/contractor. Surety is unlike indemnity insurance in which the insurance premium effectively pays for any losses, surety bond/payment guarantee premiums are service and credit fees charged for the use and benefit of the surety providers financial backing and guarantee support. If you have any queries please contact us or one of our accredited agents who will be happy to assist you.
• WHAT IS CORPORATE COUNTER INDEMNITY?
A corporate counter indemnity is a legal agreement enabling the surety provider as the issuer of your bond or payment guarantee to be reimbursed in the event that it has to pay out any claims under the terms of the bond it has issued to you. A counter indemnity reinforces common law and statutory recourse rights available to the surety provider against the applicant and/or its directors and associated or group companies, in the event of a claim being made upon the bond it has issued.
• WHAT ARE THE COSTS INVOLVED IN THE SURETY APPLICATION?
There are no fixed rates or costs and each application is assessed on its own strengths and merits and taking into account the volume, frequency and nature of the bonds applied for. The surety provider and its underwriters will assess and reference all the factors pertaining to your project and will determine a rate or cost of surety that is applicable.
• AM I ABLE TO CANCEL A BOND AFTER IT HAS BEEN ISSUED?
This is not generally possible as a surety is a binding contract between three parties and for the benefit and security of one of them. Unless the surety bond expires or is released in accordance with the terms contained within it, then only the employer/beneficiary can agree to its release or cancellation.
• ARE THERE ANY HIDDEN COSTS OR FEES?
No, all costs are clearly laid out and detailed in any documentation following both an application and any surety if offered by a surety provider.
• ARE THERE ANY PAYMENT TERMS AVAILABLE?
Generally speaking payment terms for surety and payment guarantee premiums are not available.
• CAN THE BOND WORDING OFFERED BE AMENDED OR IS THERE DIFFERENT BOND WORDING AVAILABLE
Revised or amended bond wording may be possible to the benefit of the 'Applicant' or the 'Beneficiary' but subject to the agreement of the surety provider issuing the surety bond or payment guarantee first had and obtained
• IS SHABUS SECURITIES CORPORATION THE SURETY BOND PROVIDOR?
No, Shabus Securities Corporation obtains and sources surety bonds and payment guarantees from independent and rated surety providers and insurers.