What is a Security Bond Definition?
The Security Bond Definition is a surety bond that is secured by some sort of collateral. In many surety bond cases, there is not any collateral required. Thus, the surety will simply issue the bond, like a performance bond or payment bond, based on the financial standing of the underlying entity being bonded. However, in a security bond, there is collateral that is required. This collateral cannot be part of the job that makes up the contract underlying the performance and payment bond. Instead, there is required additional collateral, or “security,” and this collateral is what is being held.
Some sureties ask for an irrevocable letter of credit. This is purely liquid security for the underlying bond. In addition, some sureties will want funds control so that they can write the underlying performance bond.
via Blogger Security Bond Definition
via Blogger Surety Bond Florida **1-800-850-8819** Best Florida Surety Bond Quotes
The post Surety Bond Lost Title Bonds Fort Worth Dallas TX 817-590-9725 appeared first on Surety, Contract, Payment, and Performance Bonds.
via Blogger Surety Bond Lost Title Bonds Fort Worth Dallas TX 817-590-9725
What is a Collateral Bond?
A Collateral Bond is different when used in the context of a surety bond. In the financial world, a collateral bond is a short term debt security, which is used to provide collateral against a company’s bond issuance. However, in the surety bond context, a collateral bond is a bond that requires some piece of collateral to secure the underlying performance or payment bond.
For many companies, they can qualify for a performance bond or payment bond without the need for any collateral. We work with our clients to try and get them surety bonds without collateral. The reason for this is pretty obvious. They more collateral that is required, the less collateral is available for other purposes.
Where we typically see collateral used to secure a bond is in the performance bond situation where a company is not fully financially secure. In those situations, the company cannot qualify on its own for the bond. So, the surety company will require that the Obligor post some sort of collateral. What is preferred is liquid collateral, like a bank line of credit. However, other collateral can be used, such as real property, other property such as equipment. Obviously, equipment is not preferred as it can be sold, which would eliminate it from being used by the surety as a piece of collateral upon default.
via Blogger Collateral Bond
Write something about yourself. No need to be fancy, just an overview.