Steps to Get a Performance Bond

Here’s how you can obtain a performance bond for your business:

1. Complete an Application

• Start by filling out a performance bond application. Many companies, like Swiftbonds, offer an online application process that only takes a few minutes.

• Include key information such as:

  • Contract details

  • Bid specifications

  • Notice of Award letter (if applicable)

2. Submit Financial Statements (for Larger Bonds)

• For contracts exceeding $600,000, surety companies often require:

  • Business financial statements (profit & loss statements, balance sheets)

  • Personal financial statements for business owners

3. Provide Project Documents

• You’ll need to send documents like:

  • Contract details

  • Bid results (if available)

  • Specific project information

4. Work with a Surety Company or Broker

• Surety providers assess your financial stability, credit history, and project details to determine eligibility.

• You’ll then receive a bond quote based on your qualifications and the project’s scope.

For a state-specific guide, check out how to obtain performance bonds in Kentucky or Mississippi.

What Are the Costs of a Performance Bond?

The cost of a performance bond typically ranges from 1% to 5% of the contract value. Factors influencing the cost include:

• The contractor’s financial strength and credit score

• The complexity and size of the project

• The bond amount required

Want a detailed breakdown? Visit how performance bond costs are calculated.

Common Questions About Performance Bonds

What Happens When a Performance Bond Is Called?

If the contractor defaults on the contract, the obligee can make a claim on the bond. At that point, the surety company either compensates the obligee or hires another contractor to complete the work. Learn more about what happens if you can’t fulfill a performance bond.

Do You Get Your Money Back for a Performance Bond?

Generally, performance bond premiums are non-refundable once the bond has been issued and submitted. However, if the bond hasn’t been filed with the obligee, a partial refund may be possible.

What’s the Difference Between a Performance Bond and a Bank Guarantee?

A performance bond only requires action if the contractor defaults, whereas a bank guarantee typically requires immediate payment when called, regardless of contract performance. Learn more about bonds and guarantees.

Who Pays for a Performance Bond?

The cost of a performance bond is paid by the contractor (the principal). However, contractors typically include this cost in their project bid, meaning the obligee ultimately bears the expense. To understand payment structures in detail, visit this performance bond payment guide.

How Long Does It Take to Get a Performance Bond?

Obtaining a performance bond can be quick, especially for smaller projects. With completed paperwork and sufficient financial information, bonds can often be issued within a few days. For large or complex projects, the process may take longer, as more detailed underwriting is required.

What Does a Performance Bond Cover?

Performance bonds protect project owners from:

• Non-performance by the contractor

• Financial losses due to incomplete or faulty work

• Delays caused by contractor default

They ensure project completion as per the agreed terms. For instance, check out the benefits of Louisiana performance bonds.

Who Are the Three Parties to a Performance Bond?

Performance bonds involve three parties:

1. Principal: The contractor who purchases the bond.

2. Obligee: The project owner requiring the bond.

3. Surety: The company providing the bond and guaranteeing the contractor’s performance.

For more information on state-specific performance bonds, visit guides for Maryland or New Mexico.

Ready to Get a Performance Bond?

From my experience, I’ve found that obtaining a performance bond doesn’t have to be complicated. By working with an experienced surety provider, you can quickly secure the bond you need and get back to focusing on your project.

Start your application today or check out additional resources at Swiftbonds. Whether you need help with a bid bond, payment bond, or performance bond, we’ve got you covered!