With funds administration, construction proceeds are placed into an escrow account in the contractor’s name and managed on behalf of the contractor. Vendors and subcontractors receive payments straight from the escrow account, with input and validation of progress from the contractor.

Collateral can include irrevocable letters of credit (ILOC), cash or equivalents, cash value of life insurance (CVLI), or real estate. Each form of collateral may present limitations and special underwriting considerations.

SBA (Small Business Administration) guarantees can be used to support bonding for multiple types of contractors. We participate in the SBA Preferred Surety Bond (Plan B) program, which provides an 80 percent or 90 percent guarantee depending upon the type and status of the contractor. We also participate in U.S. regional programs, which will give up to 40 percent collateral, typically used in conjunction with funds administration.