People are predisposed to take the path of least resistance. And yet, when an individual, association, non-profit or business needs to attain a commercial surety bond that necessitates collateral to satisfy an entity they’re working with – typically a government agency – some turn to banks for lines of credit (LOCs), even though that might not be the best route for them.
“Right now, with the way banks are with the line of credit, most clients feel that the bank is charging too much to have a line of credit issued,” said Melanie Stokes, commercial surety manager at Allstar Surety. “Some charge as much as $1,600 just to have a small line of credit issued versus coming to us and we’re writing it and putting it through escrow. With escrow, all we’re going to charge is a $250 fee to hold those funds versus the line of credit.”
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