Bid Bonds

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What is a Bid Bond?


Bid Bonds serve as a ‘guarantee’ that the information you have submitted is correct and genuine, and that you have the necessary funds to bid on a public project. A bid bond also serves as a way to gauge the likelihood of obtaining a performance bond later on.


A bid bond ensures that an obligee is protected, should you become unable to honor the necessary costs to finish the project.

Sometimes, unexpected major costs occur, and, the contractor then becomes unable to pay or qualify for the necessary performance bond to complete the project.


It’s nearly impossible to take into account all of the necessary costs for building, hiring necessary professionals, and completing a project. Before posting a public project, the project owner is responsible for the fees, including engineers, architects, inspectors, and contractors.


When you bid on a project, you are applying yourself to a major financial responsibility. A bid bond helps to protect the project owner, and recoup costs if you can’t complete the project.

How much is the Bid Bond process fee?


You shouldn’t pay any money for the bid bonds in advance, but there are some fees that should be paid throughout the performance bond process.


Other costs may be outlined by the ‘obligee’ before you take part in a bidding process. To find out if you can get a bid bond, fill out our online application.

Why Bid Bonds are valuable.


A bid bond is a required part of the process to successfully participate in a public project auction. A performance bond along with other necessary documentation is typically required to complete the process successfully.


Without a valid bond, your bid proposal will not be accepted. If you get the project, you should expect a performance bond to be required before starting the work. The “obligee” will expect these forms of financial assurance and security on your behalf to move forward to the next steps of the process.

Where can you get a Bid Bond form?


Being a leader in the bond market, we can provide you with all the necessary information to get started. To add more, we have most of the necessary, common industry forms available online.


Just remember to check with the “obligee” first to determine whether or not any other additional documentation or forms might be necessary.

Requirements for larger projects.


Bidding on larger public projects will require additional documentation and obtaining a performance bond to secure your bid.


Any project that is more than $350,000, will require you to provide  necessary job specifications as illustrated by the obligee – this includes documentation and forms.


We take strides to make the process easier for you. However, there will be more requirements along with your personal credit history.


These can include reviewing your past business financials, total industry experience, your personal, and business credit history as applicable.


The following should be done to determine whether or not your company can handle all necessary fees, resources, and employees to get the job done.


Accurate, reliable, and recent information is critical and will help to make the process smoother. Often, obtaining a construction CPA (Certified Public Accountant) could be beneficial, as it will add more value to your chances.

Bid invitations and request forms.


To get started, you will need to fill out and submit a bid invitation letter, as well as the actual bid request. Often, obligees demand some other necessary documents, that’s why communicating with the obligee is vital.

Bid Bond vs. Bid Deposit.


Depending on the project you bid on, a bid surety bond will be based on the percentage of the total contract value. This will typically range between 5-10% of total contract costs.


Some obligees may require more money paid in advance, as well as other costs or documentation requirements - so be sure to always check with them first before bidding.


For example, if you bid on a large project, such as $600,000, this means that you should pay 10% - or $60,000 upfront. It’s crucial to be backed by a time-tested surety bond company.

Bid Bond claim risks.


When you apply for a bid bond, you agree to take full responsibility for up to the entire amount including any legal costs.


Once you’ve signed the "indemnity agreement” you will officially agree to total legal liability for any bids that you make.


If or when a “bond claim” were to occur, the indemnity agreement is designed to leverage both your personal and any corporate assets to cover costs or penalties. Bond claims can create a lot of hardship, but if you go through the process correctly you should pass with flying colors.


When deciding on a bond agent or company it’s important to keep an eye out for any “red flags” - such as a lack of information on the risks associated with bond claims.


Once you’ve chosen a bond agency you can trust, your bid bond or surety agency will secure your bid as well as protect you in the case of any bond claims.

Avoid bond claims and protect your investments.


 No matter how big or small the project is, avoiding bond claims can be as simple as ensuring all the information you present to your bond agency is correct and accurate.


Also, by obtaining performance bonds you will add additional financial security with each completed project.


Bond claims can reach as high as your bond or more, plus fees. Going with a company like ours helps you to prevent that – saving you money in the long run.


For more information on what our bonds offer and how they work you can reach us directly and we’ll walk you through the process as well answer any questions you may have. Call us at (800) 921-1008 or email us  at

Bid Bonds and Performance Bonds.


The first step: a bid bond is required to participate in auctions for public jobs. It is a form of security to demonstrate to the “obligee” that you have the necessary funds and documentation in order to fulfill the job requirements.


It will also verify that you have presented accurate information regarding your business and finances, and that you have been approved and bonded through a “surety” (bonding agency). This will demonstrate your legal eligibility to participate in the bidding process.


The next step is to research and obtain what is necessary for a performance bond, so that you may combine the two to maximize your potential in qualifying for public projects.

Are Bid Bonds possible without Performance Bonds?


Performance bonds are a prerequisite for contractors to take part in a bidding for a public project. Taking into account all the possible risks that might arise, a performance bond is a savior for the project owner. Performance bonds are put into place to ensure that you will pay the contractors, and buy the necessary materials.


In most states, both performance and bid bonds are required as a way to guarantee that the public is protected and the information about your company and funds are genuine. In cases where the bidders haven’t got enough funds to complete the project, the responsibility will often fall on taxpayers.

Why Performance Bonds are important.


1. Protecting Subcontractors and Suppliers

Obtaining a performance bond for a project is the best way to ensure that you will pay all laborers, suppliers, and subcontractors. Sometimes, a contractor may run out of funds, and then the costs will not be covered without a performance bond.


For example, in rare instances, a contractor might bid on multiple projects and win all of them. However, if he defaults on the project costs, or goes bankrupt, this means that costs for all of those projects will not be honored.


2. Business Growth

Building a strong, meaningful relationship with your surety company will likely dictate your success with getting bonded for public projects. They will help you to obtain and complete the necessary documents, and even protect you from bidding on projects beyond your financial means.


When bidding on a public project, understand that even if it doesn’t require a performance bond or payment bond up front, the likelihood that it will later, is significantly high.


Also, keep in mind, that the longer you wait to get bonded, the more difficult it will be to obtain a performance bond later on. The “surety” (bonding agency) will verify if you meet the necessary requirements to-date for performing qualifying bonded work.


#3 Putting Taxpayers at Risk

Finally, as mentioned above, when a contractor defaults on a public job, it often becomes the burden of taxpayers. There is little protection in place beyond these bond types, other than a claim filed against your performance bond.

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How to Get a Bid Bond FAST!


Applying for an Bid Bond is not difficult, as we’ve simplified the process for you into easy to understand steps, which can be found on our Bid bond application page.


Finally, if you would like to speak to a live customer service representative to walk you through the process of applying and getting approved for a Bid bond today, we are here to answer all questions. And our professionals are committed to easing the process for you. Call us at (800) 921-1008, Live Chat with us Below or contact our Bond Manager at or APPLY NOW!


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