Performance bonds provide legal and financial protection for those involved in construction projects.
When working on a construction project, the contractor secures this bond to guarantee their work and performance under their contract to whomever requests the bond (called an obligee), which is usually the owner, often a government entity, sometimes the owner’s lender, and rarely a prime contractor.
Surety bonds assure owners of project completion because a capable contractor, one who qualifies for a performance bond is unlikely to default on a project. If a contractor fails to complete a project, the surety bond guarantees compensation for any monetary loss up to the amount of the performance bond
A performance bond is different from a payment bond as it ensures the job will be completed correctly. A performance bond and payment bond are almost always both required. We normally package a performance and payment bond together so you will only pay one rate for both.
Stand-alone performance or payment bond are sometimes required, but not very often. Whether your contract requires a Performance Bond, Payment Bond, or a Payment and Performance Bond together, the premium rate does not change.
How Much Does a Performance Bond Cost?
Performance bond rates vary for a number of reasons, including the project’s total cost and the contractor’s credit and financial history.
Contractors with good credit and financial history can expect to pay a fee in the amount of .5% to 5% of the bond’s full value to get the bond. If a contractor fails to qualify for a normal bond, special bonds for those with less than ideal credit can be purchased for a considerably higher fee.
How to Get a Performance Bond FAST!
Applying for a performance bond is rather simple. Just apply through our easy online form and submit your bond application. We will contact you soon after with a quote on your bond. For bonds with higher amounts, you may be asked to submit additional documentation which may make the process of approval slightly longer.
Bonds with smaller amounts are usually processed more quickly. Call our Bonds department at (800) 921-1008, if you have any questions about the application process. We’re always willing to help.
Finally, if you would like to chat with a live customer service representative to walk you through the process of applying and getting approved for a Performance bond today, click the live chat button below or contact our Bond Manager at Bonds@BFBond.com