Small businesses are the engine that runs Canada’s workforce. As of the most recent data collected in 2023, Alberta boasts about 167,242 small businesses with less than 50 employees. These businesses represent roughly 95% of all businesses in the province, and each is completely unique with their own individual needs.
There’s a lot to know when you run a small business, and surety bonds are often not at the top of owners’ lists of “things to do.” That’s where we at Lane’s come in to help. Surety bonds are a financial guarantee that safeguards the public, your clients, or government bodies by ensuring you meet your legal and contractual obligations, and we have many long-standing relationships with surety providers in Alberta. After more than 15 years in the business, we consider ourselves surety bond experts.
Whether you’re applying for a licence through Service Alberta or securing a contract surety bond for a construction project, we help make the process straightforward and support you every step of the way — from initial consultation to final approval.
What are small surety bonds and contract surety bonds?
Both small surety bonds and contract surety bonds involve three parties: the principal (the business required to obtain the bond), the obligee (the government authority or project owner requiring the bond), and the surety (the company providing the financial guarantee).
Small surety bonds typically include license and permit bonds, trustee bonds, and other low to moderate bond amounts required by municipalities, provinces, or regulators. These bonds are often a condition of licensing and ongoing compliance.
Contract surety bonds, such as bid bonds, performance bonds, and labour and material payment bonds, are commonly required in construction and service contracts. They guarantee that a contractor will enter into a contract as was promised, complete the work as agreed, and pay subcontractors and suppliers.
Insurance brokers such as us at Lane’s act as intermediaries, connecting businesses needing surety bonds with the surety companies (or underwriters) that issue the bonds. Our role is to find you the right surety provider, assess financial risks, and guide clients through the process, ensuring the bond guarantees performance for business owners.
Step 1: Identifying the bond requirement
The first step is determining exactly which bond is required. For small surety bonds, requirements are usually outlined in licensing legislation or regulatory guidelines and clearly specify the bond type and amount.
For contract surety bonds, the bond requirement is typically included in tender documents or contract terms. These requirements may vary by project size, scope, and owner, and often include multiple bond types at different stages of the project.
Step 2: Completing the application
The application process differs depending on the bond type and amount. Small surety bonds are usually a relatively straightforward application, with particulars including basic business information, ownership details, and authorization for a credit check. In many cases, approvals can be issued quickly with minimal documentation.
Contract surety bonds, particularly performance and payment bonds, require a more detailed application. Contractors may be asked to provide financial statements, work-in-progress reports, details of key personnel, and a history of completed projects. This information helps the surety assess the contractor’s capacity to complete the bonded work.
Insurance brokers such as us at Lane’s play a key role in the initial stages. We will review the requirements, confirm that all necessary information has been included, and verify that the correct bonds are arranged in a timely manner and before any deadlines are missed.
Step 3: Underwriting and risk evaluation
Underwriting is the surety’s assessment of risk. For small surety bonds, underwriting is often credit-driven. Strong personal or corporate credit can result in quick approvals and lower premiums, while weaker credit may lead to higher costs or additional conditions.
Contract surety underwriting is more comprehensive. In addition to credit, we, as the surety, will evaluate financial strength, experience with similar projects, and the overall stability of your business. This process ensures that you as the contractor will have the technical and financial ability to meet contractual obligations.
Step 4: Premium calculation
Surety bond premiums are calculated as a percentage of the bond amount. Small surety bonds often carry modest premiums, making them an affordable compliance requirement for many businesses.
Contract surety bond premiums are also percentage-based, but reflect the size and complexity of the project. Contractors with strong financials and proven experience typically qualify for more competitive rates.
Unlike insurance premiums, surety bond premiums are not based on anticipated losses, but on confidence in your business’s ability to perform.
Step 5: Bond issuance and filing
Once your application is approved and your premium is paid, your surety will then issue your bond. For small surety bonds, issuance is often quite quick, sometimes even during the same business day.
Contract surety bonds are issued according to project timelines, with bid bonds required at tender submission and performance and payment bonds issued upon the award of the contract. The bond documents must then be delivered to the obligee in the required format.
Step 6: Ongoing obligations and renewals
Most small surety bonds must be renewed annually to remain valid. Failure to maintain an active bond can result in license suspension or regulatory penalties.
Contract surety bonds remain in force for the duration of the project and, in some cases, through warranty or maintenance periods. Throughout the bond term, your business must meet all legal and contractual obligations to avoid claims.
Trust Lane’s to get you through the bond process and keep you protected
Insurance brokers such as us at Lane’s will act as your trusted advisors throughout the bonding process. We have more than 15 years of experience in the surety bond business and have assisted 1,000s of satisfied clients.
In addition to being surety bond experts, we are also business insurance experts. Life is full of surprises, and not all of them are good ones. You’ve worked hard to grow your business, and you need to protect that investment with the right business insurance policy.
A sampling of some of the business insurance policies available through Lane’s are:
