Purpose of a Surety
1. Risk Mitigation: Grants represent a financial adjunct that secures that end-recipients pay and thus conserves the obligees from eventual losses if the main contractor defaults or fails.
2. Assurance: This minimizes the probability that a default occurrence may happen, which raises the level of trust and confidence of counterparties that the principal will be able to repay the money and thus have the commitment to meet their obligations as per the contracts or laws.
3. Facilitation of Transactions: Sureties make transactions possible for those who just have limited incomes and creditworthiness by offering them the opportunity to take part in businesses, projects, and contracts that the other parties require of financial guarantees.
4. Compliance: They dictate conduct in compliance with the law or contract claims, be it for a bond for this or that or for the performance of an economic activity.
5. Risk Transfer: Guarantors have the ability to eliminate the obligation of performance of the obligee by taking care of surety, facilitating the risk assessment in various industries and spheres.