Credit tightening and upcoming regulatory changes in the banking industry are creating an environment where contractor lines of credit may see a pullback. With liquidity an important factor in qualifying for a surety bond, the health of the banking industry is crucial. Recently another bank – the Heartland Tri-State Bank of Elkhart, Kansas – failed, raising concerns once again over the impact of bank closures on contractors, their access to their deposits, and the effect of liquidity constraints on fulfilling payroll, project and surety bond requirements.
What Changes Lie Ahead?
Mike Sanders, AFSB, bond manager at Old Republic Surety, wrote an article for NASBP "Pipeline" that sheds light on instability in the banking sector and what contractors need to know about access to their money if their bank should fail. It’s important for contractors to stay ahead of these issues and work with bond underwriters when their bank accounts are solid so that, if a problem arises, the contractor has a good relationship and track record with bond providers.
Read more on the NASBP website.
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