PERSONAL GUARANTEES AND THE GENERAL INDEMNITY AGREEMENT WHAT YOU SIGNED FOR YOUR BONDING LINE.
When a surety bonds your company, it asks the owners, and usually their spouses, to sign a general indemnity agreement. That agreement makes your personal assets the backstop for every bond the surety writes for you, for as long as the agreement is in force. Bank lines, equipment loans and leases often add their own personal guarantees. Most owners sign these early and never total them up, so the first step is a list of every guarantee you have signed and what each one covers.
A surety bond is a credit relationship, and the surety prices it on the assumption that it will be repaid if it has to pay a claim. The general indemnity agreement is how it gets repaid. It lets the surety recover what it spends to complete your job or settle a claim, demand collateral when a claim is made, take assigned contract funds and examine your books. Spouses are asked to sign because sureties have seen assets moved to a spouse before a bankruptcy or a divorce.
WHAT IT MEANS.
A general indemnity agreement is the contract a contractor's owners sign with a surety, promising to repay the surety personally for any loss, cost or legal fee it pays on the company's bonds.
The guarantee is a fact of bonded work, and a strong surety relationship is worth it. The wealth risk comes from losing track of what you have signed, never reviewing it as the company grows and keeping every dollar of personal savings within reach of a claim.
WHERE PERSONAL GUARANTEES PUT THE FAMILY AT RISK.
No one has a list of what was signed
The indemnity agreement from the first bond, the guarantee on the bank line, three equipment loans and a building lease each hold the owner personally liable in a different way. Most owners cannot say from memory how many they have signed or which ones are still in force. The surety and the bank each know their own piece. The owner is the only one with all of it at stake.
The agreement outlives the reason it was signed
General indemnity agreements usually stay in force until the indemnitor gives written notice to end future obligations, and even then they cover bonds already written. Former partners, ex-spouses and relatives who signed years ago can still be on the hook. Owners who sell part of the company often forget the seller is still an indemnitor on the open bonds.
All of the family's savings are inside the reach of a claim
An owner who keeps the family's savings in accounts the indemnity agreement can reach, and has the house as the largest asset outside the company, has tied the family's whole net worth to the company's worst job. One defaulted bond can take both the business and the savings built outside it.
WHAT IT LOOKS LIKE IN DOLLARS.
The company, each owner of the company and each owner's spouse, plus any affiliated companies. Sureties ask for spouses so assets cannot be moved to the spouse ahead of a claim.
To repay the surety's losses and costs on any bond, including completion costs, claim settlements, legal fees and investigation costs, and to post collateral when the surety demands it.
Until each indemnitor gives written notice ending the agreement for future bonds. Bonds written before the notice stay covered until they are released.
THREE STEPS THAT KEEP THE GUARANTEE FROM REACHING THE FAMILY.
Pull the surety indemnity agreement, the bank loan documents, equipment loan agreements and leases, and list who signed, what each covers and whether it is still in force. Keep the list with your attorney and update it each time you sign something new. The list is what you and your advisors work from.
The best protection is a company with working capital, a clean WIP schedule and jobs that make money. Sureties extend more credit, and sometimes ask for less, when monthly statements are reliable and the owner can explain every open job. A controller and a monthly WIP review protect the guarantee as much as they protect the margin.
Ask an attorney about which assets your state protects, how retirement accounts are treated and what can be done ahead of time. Moving assets after a claim is too late and can be undone. Planning done years in advance, in the open and for ordinary reasons, is a different thing.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $3,300 | $1,000 |
| $1M to $3.5M | $2,600 to $5,300 | $1,500 |
| $3.5M to $6.5M | $3,800 to $8,300 | $3,000 |
| $6.5M to $9.5M | $5,100 to $11,800 | $4,500 |
| $9.5M to $12.5M | $6,100 to $14,900 | $6,000 |
| $12.5M to $15.5M | $7,400 to $17,650 | $7,500 |
| $15.5M to $18.5M | $9,400 to $22,400 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
Every job shows its margin while it is still open.
Everything in Core, plus the bookkeeping and bank reconciliations done for you, and the job costing and WIP software set up, loaded with your cost codes, and managed every month. Use your own online software, or move to ours and we cover it.
A bookkeeper we choose does the books and reconciliations. No payroll.
You approve, and the money side gets handled.
Everything in Strategic, plus a controller we choose who handles your bills and receivables for you the way an in-house controller would. They call vendors, pay the bills and keep the accounting current. We plan the cash flow first, and you approve every payment because it is your money.
A controller we choose does the payables and receivables. No payroll, no pay applications, no collections.
FREQUENTLY ASKED.
