A Surety Bond Solution for CRE

Deposit Solution is a new internet-based company that provides an alternative to security deposits for commercial real estate companies. Through the firm's website, landlords and tenants can purchase surety bonds according to the terms of the lease agreement. The company, which is co-funded by Lockton Insurance Brokers, claims it is the first platform of its kind. To find out more, we sat down with Tim Noonan, president and CEO of Lockton Insurance Brokers, the Pacific Series of Lockton Companies, for an exclusive interview. Here, he tells us all about the demand for surety bonds and the benefits to both landlord and tenant.

GlobeSt.com: What was the impetus to create Deposit Solution? 

Tim Noonan: We saw a void in the commercial real estate marketplace and an opportunity to bridge the needs between landlords and tenants regarding security deposits. The process can be cumbersome and costly. Landlords are burdened with vetting and monitoring tenants' financial viability, as well as securely tracking cash deposits and letters of credit. On the other side, business owners prefer not tying up their capital or lines of credit to meet their lease deposit obligations. We decided to introduce a surety bond for the commercial real estate industry that would replace the need for cash or letters of credit as a security deposit, providing a single online platform where tenants and landlords can transact.

GlobeSt.com: Tell me about the platform? 

Noonan: Tenants can purchase a surety bond through our website. After submitting the online application and getting approved, a surety bond is issued to the tenant's landlord covering the amount specified in the lease agreement. The entire process is easier and quicker than obtaining a letter from a bank and it keeps the tenants in greater control of their financial position.  Landlords are able log into the platform's management system to receive and track all their deposit bonds, reducing their administrative expenses and outsourcing costs.

GlobeSt.com: How does this benefit landlords? 

Noonan: Deposit Solution simplifies lease negotiations and provides an alternative form of guarantee that is immune to bankruptcy. It also provides added security through a secondary screening process and makes the management of security deposits easier and more cost efficient. Landlords find Deposit Solution to be an effective marketing tool to attract tenants because it simplifies the leasing process for them and helps tenants save money.

GlobeSt.com: And, tenants? 

Noonan: Quite simply: it saves them money and keeps cash flow in their business. Tenants can purchase a surety bond in place of a security deposit or letter of credit at a fraction of the cost. Funds that were once sitting in a landlord's account for the duration of the lease can now be used to grow their business. Tenants also appreciate the ease of the application and renewal process, which can take as little as 24-48 hours.

GlobeSt.com: What are your initial goals in launching the company, and what has the response been like? 

Noonan: We would like to be the standard practice in commercial real estate lease negotiations. Retail, office and industrial can all benefit from Deposit Solution and the market response has been “why didn't I think of that?”

Deposit Solution is a new internet-based company that provides an alternative to security deposits for commercial real estate companies. Through the firm's website, landlords and tenants can purchase surety bonds according to the terms of the lease agreement. The company, which is co-funded by Lockton Insurance Brokers, claims it is the first platform of its kind. To find out more, we sat down with Tim Noonan, president and CEO of Lockton Insurance Brokers, the Pacific Series of Lockton Companies, for an exclusive interview. Here, he tells us all about the demand for surety bonds and the benefits to both landlord and tenant.

GlobeSt.com: What was the impetus to create Deposit Solution? 

Tim Noonan: We saw a void in the commercial real estate marketplace and an opportunity to bridge the needs between landlords and tenants regarding security deposits. The process can be cumbersome and costly. Landlords are burdened with vetting and monitoring tenants' financial viability, as well as securely tracking cash deposits and letters of credit. On the other side, business owners prefer not tying up their capital or lines of credit to meet their lease deposit obligations. We decided to introduce a surety bond for the commercial real estate industry that would replace the need for cash or letters of credit as a security deposit, providing a single online platform where tenants and landlords can transact.

GlobeSt.com: Tell me about the platform? 

Noonan: Tenants can purchase a surety bond through our website. After submitting the online application and getting approved, a surety bond is issued to the tenant's landlord covering the amount specified in the lease agreement. The entire process is easier and quicker than obtaining a letter from a bank and it keeps the tenants in greater control of their financial position.  Landlords are able log into the platform's management system to receive and track all their deposit bonds, reducing their administrative expenses and outsourcing costs.

GlobeSt.com: How does this benefit landlords? 

Noonan: Deposit Solution simplifies lease negotiations and provides an alternative form of guarantee that is immune to bankruptcy. It also provides added security through a secondary screening process and makes the management of security deposits easier and more cost efficient. Landlords find Deposit Solution to be an effective marketing tool to attract tenants because it simplifies the leasing process for them and helps tenants save money.

GlobeSt.com: And, tenants? 

Noonan: Quite simply: it saves them money and keeps cash flow in their business. Tenants can purchase a surety bond in place of a security deposit or letter of credit at a fraction of the cost. Funds that were once sitting in a landlord's account for the duration of the lease can now be used to grow their business. Tenants also appreciate the ease of the application and renewal process, which can take as little as 24-48 hours.

GlobeSt.com: What are your initial goals in launching the company, and what has the response been like? 

Noonan: We would like to be the standard practice in commercial real estate lease negotiations. Retail, office and industrial can all benefit from Deposit Solution and the market response has been “why didn't I think of that?”