Guarantees you will do the job at the price you bid.
Usually written when you are awarded the bid to guarantee you will finish the job to the contract specifications within the time allowed.
Goes with the performance bond at no extra cost to guarantee you will pay your suppliers.
Click here to purchase a Notary Bond
Price and how it works
Bonds are not like insurance, they’re more like banking. The bonding company never expects to pay a claim, and if they do you have indemnified them corporately and individually so they can go after any asset you own to pay them back!
Bonding companies underwrite the risk at the Bid bond level so they can write the performance & payment bond if you are awarded the bid.
*If you have a good credit score (over 675), we offer a “Line of Surety” up to $250,000 per job and $400,000 aggregate.
If your bid was more than 10% lower than the next lowest bid you will need to explain to the bonding company why you can do the job for so much less. (take note of the 3 bids above you)
Bid Bonds may cost $100 or $200.
Performance/Payment bonds will cost 3% of the contract price, so you need to pump that amount into the bid. This rate may go down after you build a track record of performing the contract.
Various cities have their own bond forms they want used. You will see this in the sample contract you are given in the pre-bid meeting. The sample contract will also advise what the “liquidated damages” are for each day you go past the deadline. You will need that information to put on the Bond request form. Your Company is the Principal. The one you are doing the work for is the Obligee. We will need the address for the Obligee and a copy of the contract.
Some Cities (Mesa, AZ & Glendale, AZ) have additional insurance requirements, so you will want to fax the insurance page of the contract, prior to bidding in order for us to advise a ballpark figure of the additional cost.
If you want to bond a job over $250,000 it is much more complicated. The application is 6 pages long and you will need to attach CPA reviewed or compiled business and personal financial statements. Bonding companies look primarily at the 3 C’s: Character, Capacity and Capital. In other words, if you can get a bank line of credit for the contract price you may be able to get a bond. If you can’t, you won’t.
Building a bonding line of credit is baby steps. Keep a journal of jobs you have completed (including Owner’s name and which Sub’s you used and suppliers). After you have established a track record of completing ever increasing contract amounts and secure a construction accountant, the bonding company will allow you to increase your contract amounts.