Performance and Payment Bonds for Contractors

Payment bonds are a guarantee that the contractor will pay all laborers, material suppliers, and contractors per contractual obligations.

P&P Bonds can have any face value, but they are usually issued in an amount covering 50 to 100% of the value of the construction contract, with 100% performance and payment bonds being the most frequent. If you need a performance and payment bond, the premium can range from around 0.5% of the contract value on the low end to 3% on the higher end. Larger contractors will typically have a competitive sliding scale rating structure. However, the cost can vary widely from company-to-company, depending on the financial capacity, company history and credit, among other items.

Surety bonds should not be confused with an insurance policy. What makes them different is that in an insurance policy, the insurer has to defend the insured as well as cover them. More importantly, they are not able to get repaid from the insured for the amount of any loss or any costs associated with the claim. In comparison, a claim on a bond ensures that the surety company evaluates the case of the claim and the contractor to make sure that there is a valid claim and, more importantly, the surety will ask the contractor to reimburse it for any claim damages and lawsuit fees, should the surety need to payout on the contractor's behalf.

Before approving a P&P Bond, the surety company ensures that they check the applicant’s character, history of contract performances, necessary equipment, financial strength, history of paying subcontractors and suppliers on time, bank relationships and an established line of credit. These are all factors that go into the underwriting process and affect the single/aggregate program considerations.

Wide market access: We have access to dozens of surety markets, allowing us to locate the best terms and rating structure for your specific construction bond needs.

Market expertise: A specialized surety agent understands the nuances of the market and knows which surety companies are best for different types of construction bonds, whether they are standard or hard-to-place. SBP has broad experience with construction bonds and has ample resources for contractors during bid process.

Guidance through underwriting: An experienced construction surety bond agent will help you prepare your application and financial documents to present your business in the most favorable way to underwriters.

Efficient process: Partnering with us streamlines the approval and bond issuance process. SBP saves you from clunky, cumbersome and time-consuming bond providers. Whether you are bidding on a $500 million project, or looking for a small bid that may only require a soft credit pull for prequalification, SBP makes the process efficient and fast for all clients.

Speed of Issuance - If you need to submit your bid quickly, you’ll be happy to know that SBP is known for fast turnaround. SBP offers a simple application process through our website. Licensed in all 50 states and customized surety programs available for all clientele. Fast track programs available for construction bonds under certain thresholds.