1. LAUSD Boot Camp: Construction Bond Basics Presented by Patty Zenizo Preferred Bonding & Insurance Services September 11, 2013

2. Agenda What is a Contract Bond? How to Apply for a Bond Program The Pre-Qualification Process Marketing your Account Underwriting Criteria per Market U.S. Small Business Administration U.S. Small Business Administration Programs Bond Limits

3. What is a Contract Bond? A Contract Bond is a 3 party Agreement between: 1) Surety 2) Contractor 3) Owner

4. How to Apply for a Bond Program Find a Qualified Agent/Broker Complete Application Package Agent Checks for Accuracy Respond to Agent Questions Submit Additional Information Upon Request

5. The Pre-Qualification Process The 3 ’s of Bonding: Capital Character Capacity

6. Marketing Your Account Financial strength is measured and package is sent to appropriate market: Standard Specialty Sub-standard Rapid Bonds

7. Underwriting Criteria per Market Rapid Bonds.………………….. Standard……………………….. Specialty……………………….. Sub-Standard………………….. Excellent Credit, limited bonds Good Credit, Lines of Credit, Track Record, Surety Experience, CPA Reviewed F/S Good Credit, Track Record, Transitional Surety Experience, CPA Compiled F/S Collateral, Will take In-house F/S

8. U.S. Small Business Administration Bond Guarantee Program 1. Generous to Start-up Firms 2. Promotes Growth 3. Prior Experience Certificate 4. Good Credit/Poor Credit 1. Limits are kept at minimum to avoid claims 2. Promotes growth, at a slower pace 3. Prior Work Experience not Accepted; company track record only 4. Will not underwrite accounts with poor credit history SBA vs. Surety

9. U.S. Small Business Administration Bond Guarantee Program A Single Maximum Bond Limit Of $6,500,000 OR Up To $10,000,000 On Federal Projects (Under Certain Conditions) Quick Bond Program – Contracts Under $250,000 – Liquidated Damages Under $250 – No Minimum Credit or Financials Required

10. Bond Limits Based on Financial Strength & Quality of Financial Statement:  In-house  CPA Compiled/Reviewed Single Size Limit is based on Working Capital: Current Assets - Current Liabilities = Working Capital Aggregate Limit is Based on Working Capital and Sales

11. Contact Information Patty Zenizo Phone: 323-663-7814 www.preferredbonding.com