If you’re a building contractor, you’ve probably come across the term contractor bond (or construction bond). Whether you’re bidding on a public project or working with a private client, having a bond in place can make or break the deal. But what exactly is it?
What Is a Contractor Bond?
A contractor bond is a type of surety bond that protects clients, project owners, or the public in case the contractor doesn’t meet their obligations. It’s essentially a promise—backed by a third-party surety company—that the work will be completed according to the contract and that all bills (like suppliers and labor) will be paid.
Types of Bonds Contractors Might Need:
- Bid Bond – Guarantees that you’ll honor your bid and sign the contract if awarded the job.
- Performance Bond – Ensures the project will be completed to the agreed standards.
- Payment Bond – Protects subcontractors and suppliers by guaranteeing they’ll be paid.
- License or Permit Bond – Required by some states or municipalities to legally operate as a contractor.
Why Do Contractor Bonds Matter?
- Builds Trust: It shows clients you’re financially reliable and serious about your work.
- Protects Everyone: It reduces the risk for clients, suppliers, and subcontractors.
- Legal Requirement: Many public jobs require bonds by law. Without them, you can’t even bid.
- Gives You a Competitive Edge: Being bonded sets you apart from contractors who aren’t.
How to Get Bonded
Getting bonded involves applying through a surety company or agency. They’ll look at your credit, business history, and financials. Once approved, you’ll pay a small percentage of the bond amount (often 1–3%) as a premium.
Bottom Line:
Contractor bonds are more than just paperwork—they’re a key part of doing business the right way. They protect your clients, build your reputation, and help you win bigger, better jobs. If you’re serious about growing your construction business, getting bonded is a smart move.
Contact us today to get your contractor bond!