How Are Bond Claims Handled For Agricultural Bonds?

01:11 Business , Finance 0 Comments

 Agricultural bonds are a type of surety bond that agricultural businesses need to obtain in order to comply with the Packers and Stockyards Act, as well as state regulations. They are also known as agricultural packers and stockyards bonds. Agricultural businesses use these bonds as a safety net for the federal government and state they operate in, because they guarantee that agricultural businesses will abide by the rules set forth in the Packers and Stockyards Act, and will account properly for sales of agricultural products and livestock.

These sureties function like a three-party contract: your agricultural business is the principal; the federal or state authority requiring the bond is the obligee; and your surety is the entity which provides the bond.

The Agricultural & Citrus Bond Virginia is required for all agricultural businesses that need to be bonded by the U.S. Department of Agriculture (USDA). However, in a number of states, these companies also need to get a bond to meet state agencies’ requirements. Some of the businesses that have to be bonded include cotton dealers and warehouses, grain dealers and warehouses, agricultural brokers, distributors, dealers and sales agents, and livestock and equine dealers and brokers. Some examples of agricultural business that require an agricultural surety bond include packers, market agencies and dealers. These services are required to get bonded by the USDA.

The amount you have to pay for an agricultural bond depends on several factors. The major one is the bond amount, which is set by the federal or state authority that regulates your business activity. In some cases, it can be a predefined amount, while in others, the bond amount can be based on your business volume.

While your bond amount can be significant, the bond premium that you have to pay to get bonded is only a fraction of it. If your financial situation is stable, your bonding rates can be as low as 1% to 2.5%. A simple calculation shows that for a $20,000 bond, you might end up paying only $200 to $500.

The bond price is set whenever you apply with a surety. It examines your personal and business finances, including your personal credit score, business financial records, and assets and liquidity. The bond premium is lower if your overall profile is strong.

Unlike insurance, surety bonds do not protect your agricultural business. In fact, they work in the interest of federal and state authorities and the general public. They guarantee that your company will abide by all relevant laws and will make all due payments in relation to your business activity.

Agricultural businesses with problematic finances often have trouble getting bonded. Agricultural & Citrus Bond Virginia experts know these difficulties, which is why we offer our Bad Credit Surety Bonds program. It’s here to help applicants with low credit scores, tax liens, bankruptcies, or civil judgement get the bond they need.

As the risk of bonding is higher, premium rates are typically in the range of 5% and 10%. With us, however, you can rely on a top bonding rate for your situation. We foster close relations with a number of A-rated, T-listed surety companies. This allows us to shop around for the best matching bond option for you.