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Surety 007 is a pioneering company in India that is revolutionizing the Surety Bond market with the best Bid Bonds. Bid Bonds are quickly becoming the preferred option for securing Earnest Money Deposits (EMDs). In this blog, we will discuss why they are a better option compared to other instruments for EMDs.
What are Bid Surety Bonds?
Bid Bonds are a type of Surety Bond that guarantees that the bidder will accept the contract and execute the work if awarded the bid. They assure the project owner that the bidder is serious and committed to the project. Bid Bonds are usually a small percentage (1-5%) of the EMD value. This cost is a fraction of the working capital that would have been blocked if the bidder had opted for any other payment instruments for EMDs.
bid bonds the best?
Bid Bonds vs. Cash Deposits
In the past, the traditional option for EMDs was to pay cash deposits, which meant blocking working capital. This was a significant burden for businesses, especially small and medium-sized enterprises (SMEs), as they were unable to allocate funds to other business activities. Additionally, recovering the blocked funds took a lot of time and effort, as there were multiple levels of approval required.
Bid Bonds, on the other hand, do not require the bidder to block any working capital, making it an ideal option for SMEs. They only require the payment of a small premium, which is a fraction of the EMD value. Once the project is awarded, the Bid Bond is replaced by a Performance Bond. Performance Bond ensures that the contractor will complete the project as per the terms of the contract.
Bid Bonds vs. Bank Guarantees
Another option for EMDs is Bank Guarantees, which require the bidder to approach a bank and provide collateral. The bank then issues a Bank Guarantee, which serves as a guarantee to the project owner. The collateral required by the bank could be in the form of cash or property, which again means blocking working capital.
Bid Bonds, on the other hand, do not require any collateral, making it a hassle-free option for businesses. They only require the payment of a small premium, which is a fraction of the EMD value.
Advantages That make Bid Bonds best
Bid Bonds are the best option for EMDs because:
They do not require the bidder to block any working capital.
They only require the payment of a small premium.
They do not require any collateral.
They assure the project owner that the bidder is serious and committed to the project.
Conclusion
Bid Bonds are an ideal option for EMDs as they do not require businesses to block any working capital or provide any collateral. They are a small premium size product that assures the project owner, through Earnest Money Deposit, that the bidder is serious and committed to the project. With Surety 007’s technology-enabled Bid Bonds solutions, businesses can get them issued in just 3 minutes, making it a hassle-free option for EMDs.
