Performance Bond For Contractor

A performance bond is a surety bond that is issued by a bonding company or bank to ensure satisfactory completion of a project by a contractor. This bond is applied for by the contractor, in order to protect the company, government agency or private individual hiring the contractor. It also protects the contractor from having to come up with the funds up front. If the obligations are not met, the surety company will pay the claim and then seek reimbursement from the contractor. Government or corporate entities generally require performance and payment bonds for any activity where taxpayers’ investments need to be secureed.

Performance bonds are issued usually for 10% to 20% of the contract amount unless otherwise determined by state or local law. They may have any face value, but are generally issued in an amount equal to 50% of the value of the construction contract. Anyone can claim this bond but can be liable to the condition that, who so ever is in the position to file a lien on a private contract, may make a bond claim on a public project.

Part of the application process for a performance bond is to examine the financial security of the applicant. The surety bond producer may ask for financial statements, both personal and professional, background checks on anyone involved in the project, bank statements, etc.

Contact us today to get started on your performance bond application!