Question 1

What is a surety bond?

Accepted Answer

A surety bond is a three-party agreement where the surety (insurance company) guarantees the principal's (contractor's) performance to the obligee (project owner). It is not traditional insurance — if you default, you are required to reimburse the surety for any claims paid.

Question 2

How much do surety bonds cost?

Accepted Answer

Premiums typically range from 0.5% to 3% of the bond amount, depending on bond type, your credit, financials, and experience. Strong contractors with good credit pay lower rates. Texas notary bonds cost a flat $50. License bonds often have minimum premiums of $100–$500.

Question 3

What is the difference between bid, performance, and payment bonds?

Accepted Answer

Bid bonds guarantee you will honor your bid and enter into a contract if selected. Performance bonds ensure you will complete the project according to contract terms. Payment bonds guarantee payment to subcontractors and suppliers. Most Texas public projects over $25,000 require all three under Government Code § 2253.

Question 4

Do I need good credit to get bonded?

Accepted Answer

Credit is one factor but not the only one. For construction bonds, financial strength and experience matter more. We work with contractors at various credit levels. Some smaller commercial bonds are available with credit scores as low as 600–650. Texas notary bonds require no credit check.

Question 5

How long does it take to get a surety bond?

Accepted Answer

Simple bonds like notary bonds can be issued instantly online. License bonds often approve within hours. Construction bonds under $500K typically process in 24–48 hours. Larger or complex bonds may take 3–7 business days as underwriters review financials.

Question 6

What documents are required for a construction bond application?

Accepted Answer

Standard documents include financial statements (audited for larger bonds), work-in-progress schedule, resume of experience, bank references, project details, and sometimes tax returns. Requirements vary by bond size and contractor experience.

Question 7

What is bond capacity?

Accepted Answer

Bond capacity is the maximum dollar amount of bonding a surety will provide. It is based on your financials, experience, credit, and current work-in-progress. A rough formula is (Net Worth × 10) minus Current Backlog, though underwriters consider many additional factors.

Question 8

Is a surety bond the same as insurance?

Accepted Answer

No. Insurance protects you from risk. A surety bond protects the obligee from your failure to perform. You are ultimately responsible for reimbursing the surety for any claims paid. The bond is essentially a guarantee backed by your financials.

Surety Bond FAQ — Common Questions Answered

General Surety Bond Questions

Construction Bond Questions