Contract underwriting, by the numbers
The reason, in one sentence
A surety bond is not insurance that absorbs your loss; it is a guarantee that you will meet an obligation, and if the surety pays instead, you pay the surety back. That promise lives in the indemnity agreement, which the owners sign personally. The personal financial statement is how the surety works out whether that signature is backed by anything.
Which reframes the document. It is not a wealth test and there is no threshold to clear. It is a recovery question: if this went wrong, what could realistically be reached?
What actually counts
Underwriters read a personal statement in tiers, and the tiers are much less generous than most people's mental picture of their own net worth.
- Liquidity, first and heaviest. Cash, money market, marketable securities. Available immediately, without a discount. This is the number that moves an underwriter.
- Unencumbered real estate, discounted. Equity in property counts, but slowly and at a haircut. A forced sale is neither quick nor full-price.
- Retirement accounts, discounted hard. Penalties and protections make them difficult to reach.
- Your stake in the contracting company, close to nothing. If the surety is collecting on an indemnity, the company is in trouble and that stake is worth least precisely when it would be needed.
That last point catches people out. A contractor with most of their net worth in the business can present a large total and still read as thin, because the total is concentrated in the one asset that fails at the same moment the bond does.
The liabilities side, including the ones you forget
Mortgages, notes, and card balances are obvious. Two categories get missed:
- Contingent liabilities.Personal guarantees on company debt, equipment leases, or another business's obligations. These are real exposure and underwriters expect to see them listed.
- Taxes owed. An open tax lien or an installment arrangement with the IRS or FTB is material, and it is verifiable. Bonds after a lien or bankruptcy are placeable, but only when disclosed.
Spousal signatures and community property
California is a community property state, which means assets acquired during marriage are generally held jointly. If only one spouse indemnifies, the surety's practical access to those assets narrows considerably. That is why spousal indemnity is commonly requested on contract bonds.
It is not always non-negotiable, and it depends on the surety, the size of the program, and how the assets are held. It is a reasonable thing to raise with your broker before the form goes in rather than after.
If the SBA is involved
The SBA Surety Bond Guarantee program asks the same question through its own paperwork: SBA Form 912, a statement of personal history, is required from each owner holding 20% or more of the equity, alongside personal financial information. The SBA route covers the rest of that file.
Filling it in well
- Be conservative on values. A realistic statement that survives checking is worth more than an optimistic one that does not.
- Separate liquid from illiquid clearly, rather than presenting one total. You want the underwriter to find the liquidity, not hunt for it.
- Date it and keep it fresh. Like your company statements, a stale personal statement invites a request rather than a decision.
- Disclose the awkward item. Every experienced underwriter has seen worse, and has declined better files for concealment.
If your personal balance sheet is the thin part of the file, that is a common and workable position, and it is what funds control and the SBA guarantee exist to bridge. Send it to us with the rest of the packet and we will tell you where it lands. Start a contract bond quote. Underwriting always applies and we never promise guaranteed approval.