What is typically required from a surety company to issue a surety bond?

When a surety company issues a surety bond, one of the main requirements is an assessment of the principal's creditworthiness and financial stability. This assessment involves a thorough evaluation of the principal's ability to fulfill their contractual obligations, which the bond guarantees.

Surety companies need to ensure that the principal is financially sound and has the capability to complete the project or obligation for which the bond is being issued. This evaluation often includes reviewing financial statements, credit scores, past performance, and overall business operations.

While personal guarantees, collateral deposits, or governmental approvals may be required in specific scenarios, the standard procedure primarily revolves around assessing the principal's financial standing to mitigate the risk of default, which is crucial for the surety company’s decision-making process.