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Anyone Ever Get Denied For Their Bond?


Pistol Pete

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Few questions for you all:

1.) Have any of you ever been denied by insurance companies for a bond?

2.) How much assets/financial backing are they looking for to approve you?

3.) Anybody ever get started with little to no liquid assets?

Any thoughts would be appreciated B)

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I almost didn't get my Federal license due to bonding. The main insurance company decided that they didn't like what the agent did (even though a standard bond) and begged the TTB to release them from it. TTB obliged. Forcing me to scramble to find another agent and bonding company. Thankfully I did and it ended up being much cheaper! Nearly had a heart attack at one point though.

I started with very little assets, but I had a good insurance agent (the second time). Basically had to have a good personal financial statement.

One problem with the bonding is that the production capacity is based on 24/7 operation as though it was a continuous still and you were a big company. At least that's what TTB required of me. They certainly want to make sure your bond covers all operations.

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Last year I when went looking for a surety no one seemed interested in doing the business. Fortunately I had enough liquidity so I could write check for a cash bond. This year things have eased up and my broker found someone interested in underwriting the risk so I can get the cash back. But, underwriting is more stringent these days. They want to see cash on hand, broker statements, home equity value, business plan... and they're just taking a contingent risk, not handing out cash. The days of valuing risk at zero are over. The banks and insurance companies want lots of security and they only want to lend to businesses that dont need the money.

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Chicken - Egg Question....

Have an investor willing to put up all the funds. But, they don't want to start with purchasing anything major until we know the bonding is in place, and at least a preliminary approval of the TTB background check of myself and the investor is approved by the TTB. Both of these are reasonable requests, but I'm not sure how to go about it.

I know the DSP full approval is contingent on the installation being completely in place. However, is there a way to get this 'pre-approval' for the parties involved?

I don't see any reason why we can't receive a bond prior to anything else, unless someone out there knows of something different.

Any input is appreciated.

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I was denied my bond repeatedly. I finally just paid the minimum $11,000 in a cash bond to get my permit through.

I didn't stop my search for a bond, and finally found one through a local agent for Liberty Mutual via their subsidiary Ohio Casualty (those insurance companies are practically incestuous). I started with little assets and a blip on my credit. I believe they look at your credit, not so much your assets since you fill in your own financial info on the application and we know how that goes sometimes. A simple application was required. If a company is asking for extensive background paperwork, find a different one. I do highly recommend finding a broker who represents Liberty Mutual.

I found doing a superseding bond quite straight forward, just like my original cash bond, and received a refund from TTB of my $11,000 promptly.

Porter: you are required to have the bond in place for your permit application. You can get your bond anytime you want to pay for it. You can get one and then never open a DSP, the sureties and the TTB don't care. If you're not a felon and haven't previously been denied an alcohol permit, I don't know what sort of "background check" you're talking about.

In regards to equipment being in place before permit approval, I found this not to be the case. Also, I have been told by others that it was not an issue either. As long as your floor plans and equipment list are complete in your application, it shouldn't be an issue. These are paper pushers, not secret agents.

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Porter: you are required to have the bond in place for your permit application. You can get your bond anytime you want to pay for it. You can get one and then never open a DSP, the sureties and the TTB don't care. If you're not a felon and haven't previously been denied an alcohol permit, I don't know what sort of "background check" you're talking about.

In regards to equipment being in place before permit approval, I found this not to be the case. Also, I have been told by others that it was not an issue either. As long as your floor plans and equipment list are complete in your application, it shouldn't be an issue. These are paper pushers, not secret agents.

daveflintstone---

Thanks for the informatative response. We don't have any problems with a background check, it's just that little problem of someone who want's some assurances before investing. With the current loan an insurance market getting so sketchy I can't really blame him.

The statement on equipment not having to be in place though is completely opposite of what I've read and been told by others in the field. Anyone have some personal insight/experience on this?

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We started with a smallish dollar amount bond. Quickly blew the $ amount out of the water.

increasing the bond amount was our problem. The Pro Forma was good for the intial bond. The resulting increase in stock and on premise barrels, with little sales, during the "economic adjustment" made "no" a popular answer for the surity. writers. We went the T-bill route to get this off the table. Means more years of eating peanutbutter and jelly sandwitches for us. We will now look into the advice given on this thread. Thanks.

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I forgot, our advice to "newbies" for such little money on the premium, get enough room on your bond. People seem to think 16K is a good number. When getting quotes ask for a price on double and triple dollar amount. You'll see there is little difference over the year.

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