One of the most common uses of surety bonds is to provide a guarantee to a customer (often times a public contract) that the work will be completed. The issuer of the bond (for a fee) provides this guarantee to your customer in the event you are unable to fulfil your obligations. Many public and private contracts require bonds for the contract to be awarded. There are many types of surety bonds addressing different aspects of a project, read about some of the most common bonds below.
How long does it take to get my bond?
Most bonds can be obtained either same day or next day depending on the size and complexity. Larger or more complex bonds may take more time but speaking with an agent will give you an idea of what to expect.
How much will my bond cost?
Unfortunately there is no one answer. There are many factors that influence how much the bond will cost such as credit worthiness, type of project, size of project and bond amount. However, you can contact us and we can help give you an idea of what the options are.
Some of the most common bonds are…
Provides a guarantee that a contractor will complete a project satisfactorily as agreed upon in a contract. Often required for public contracts, a performance bond will provide financial compensation to the customer if the project is not completed as agreed. Many construction contracts will require a performance bond before work can begin.
Bid bonds essentially provide a guarantee that the contractor is able to take on a project at an agreed price. This addresses the issue where a contractor may bid on a project that they are unable to tackle, causing the customer to restart the process and select another contractor. The bid bond provides financial consideration in the event this occurs to make up for the added expense and lost time they will incur.
Payment Bonds are often used in conjunction with a performance bond. While performance bond guarantees a project will be finished, a payment bond guarantees that all of the workers, suppliers and sub-contractors associated with the project will be paid. This alleviates the concern that a supplier or sub-contractor will seek payment from the project owner if they were not paid by the the general contractor, for example.
Completion bonds provide a guarantee to a lender who is financing a project. The bond will guarantee the project will be completed on time, on budget and free of liens. Completion bonds are often used in large complex projects, requiring large sums of money or multiple investors.
Supply bonds are used to guarantee the availability and delivery of critical supplies and components for a project. Typically used for large, expensive and complex projects, supply bonds help ensure that projects avoid costly delays in production due to lack of the required materials and in the event it does occur, compensation will be provided.
Commercial License & Permit Bonds
License and permit bonds are different from the project oriented bonds above. These are typically required by local and state authorities in order to obtain a license to practice a particular trade. License and permit bonds act as a mechanism to protect the public by ensuring the people who obtain them will comply with statues, regulations and ordinances that govern their profession.