The Hidden Truth About Why Contractors Can't Get Bonded
The Hidden Truth About Why Contractors Can't Get Bonded (And How Your CPA Might Be the Problem)
Hey There,
Ever wonder why some contractors can land $2M jobs while others are stuck bidding on $200K projects?
It's not about skill. It's not about reputation. It's about bonding capacity.
And here's the uncomfortable truth: Your CPA might be the very person keeping you small.
The Tax Strategy Trap
After 30 years in this business and reviewing over 10,000 financials, I've seen this story play out hundreds of times:
A solid contractor. Maybe an electrical sub, or a concrete guy, or an HVAC contractor. Been in business 10-15 years. Great reputation. Steady crew. Booked solid.
But they're stuck. Can't bid on anything over $500K because they can't get bonded for more.
"Patrick," they always say, "I don't get it. We're busier than ever. Why won't they increase my bonding?"
I ask to see their financials. And there it is – the same smoking gun every time.
Their CPA has them showing minimal profit year after year. Smart for taxes? Sure. But deadly for growth.
Here's What Your CPA Doesn't Understand
CPAs are trained to minimize taxes. It's literally their job. And they're good at it.
They'll have you:
Writing off every possible expense
Showing paper losses through depreciation
Keeping profits artificially low
Maximizing deductions at year-end
All perfectly legal. All perfectly reasonable... if your only goal is paying less tax.
But here's what they don't teach in CPA school: Bonding companies and banks don't care about your tax strategy. They care about your financial strength.
The Same Game, Different Rules
From my days as a banker approving over $2B in loans, I can tell you exactly how they think.
A bonding company is essentially co-signing for your ability to complete a job. They're taking on YOUR risk.
Would you co-sign a loan for someone who shows they're barely breaking even?
Neither will they.
Here's what bonding companies actually look for:
✅ Strong Working Capital – Can you float the job?
✅ Consistent Profitability – Do you make money consistently?
✅ Clean Financial Statements – Are your numbers clear and accurate?
✅ Solid Cash Flow – Can you handle the ups and downs?
Notice what's NOT on that list? Your tax bill.
The Bankable = Bondable Connection
Here's something I've learned after decades of helping contractors: Getting bonded and getting bank financing require the exact same thing – strong financials.
Banks and bonding companies are both in the risk business. They look at the same metrics. They care about the same ratios. They want to see the same strength.
I've helped hundreds of contractors clean up their financials over the years. The pattern is always the same. We:
Build proper12-month budget and 3-year forecast
Create accurate job costing reports
Show their true financial position (not the tax-minimized version)
Document their backlog properly
And here's what happens: The contractors who couldn't get a $100K line of credit suddenly qualify for $500K. The guys stuck at $500K bonding jump to $2M.
Same business. Same work. Different story on paper.
The Real Cost of "Saving" on Taxes
Let me share what I've seen play out countless times:
🚫 The Tax Minimizer
Shows $50K profit to save $15K in taxes
Bonding capacity: $500K
Owner Salary = $125K+
Annual revenue potential: $2M
Constantly stressed about cash flow
✅ The Growth-Focused Contractor
Shows $200K profit, pays $60K in taxes
Bonding capacity: $2M
Owner Salary = $350K+
Annual revenue potential: $8M
Has breathing room to grow
Yes, the second contractor pays $45K more in taxes. But they can bid on $6M more work annually.
I've watched too many good contractors stay small because they're playing the wrong game.
Your 90-Day Bonding & Banker-Ready Roadmap
After helping contractors become bankable & bondable for three decades, here's the proven path:
Days 1-30: Get Your House in Order
Pull your last 3 years of financials
Build proper WIP schedules (most contractors don't have these)
Document your backlog accurately
Calculate your true working capital
Build 12-month Budget and 3-year forecast
Days 31-60: Tell Your Real Story
Work with a CPA who understands bonding (most don't)
Prepare financial statements that show your strength
Create a business plan that shows where you're going
Get your personal finances in order (yes, they always look)
Days 61-90: Make Your Move
Meet with bonding agents and bankers (interview at least 3)
Present your cleaned-up financials
Show your pipeline and growth plan
Negotiate your new bonding capacity and/or bank loan
The Pattern I've Seen for 30 Years
The contractors who break through – who go from $2M to $10M, from $10M to $25M – they all figure this out eventually.
They stop optimizing for April 15th and start optimizing for growth.
They realize that showing strength on paper isn't "wasting money on taxes" – it's investing in opportunity.
They understand my catchphrase: Revenue for Show, Profit for Dough, but Cash for Flow.
And when it comes to bonding? You better show the dough. 💰
The Bottom Line
Your CPA's job is to minimize taxes. But YOUR job is to grow your business. Sometimes those goals conflict.
After reviewing 10,000+ financials and approving $2B+ in loans, I can tell you this: The contractors who understand this distinction are the ones landing the big jobs while everyone else fights over scraps.
Your Next Step
Stop letting your bonding capacity limit your growth. If you're ready to become truly bankable, bondable, and capital-ready, let's talk.
I've put together a Bankable & Bonding Readiness Checklist based on 30 years of helping contractors break through their bonding ceiling.
Want the checklist? Reply “Checklist” to this email and I’ll send it your way.
Because at the end of the day, you didn't get into construction to stay small. You got in to build something bigger.
Let's make sure your financials tell that story.
Stay strong out there,
Patrick Shurney, MBA
Founder, 3P Consulting
📞 443.539.6276
Helping Contractors Become Bankable, Bondable, & Capital-Ready
P.S. – Next week, I'm diving into the 5 financial ratios that can make or break your bonding application. These are the exact ratios I looked at when approving loans, and the same one's bonding companies obsess over. If you've ever wondered why some contractors with less experience get higher bonding than you, you won't want to miss it.
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About Me:
As a veteran in financial coaching with over 30 years of corporate banking experience, my mission is to empower trade contractors like you to become numbers confident, optimize cash flow, leverage debt, and pay yourself competitively.
Ready for More?
Here’s how I can help you:
Profit Blueprint Program: Get your finances sorted and build out a 3-year financial roadmap in the next 30 days.
Loan Consulting: Get Bank Ready. With 30+ years of banking experience, I’ll make sure you're ready to approach lenders with a winning loan package.
Ready to take your financial strategy to the next level? Let’s connect and make sure you’re running a thriving business while paying yourself what you’re worth.
