Construction 101

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SBA Guaranteed Bonds

For more than 20 years, the U.S. Small Business Administration (SBA) has operated the Surety Bond Guarantee program. Its purpose is to help small and emerging contractors who have the knowledge and skills necessary for success but lack the experience or financial strength to obtain bonds.

Bond Solutions

Different bond companies target different types of contractors. At Surety Bond Source we have a bond company for every type of contractor and every situation.

Construction Bonds 101

If you need one of the bonds discussed on this page, please complete our appropriate application:

Bond up to $250,000 or Total Bond Program up to $500,000

Bond Over $200,000

If you aren't sure what type of bond you need, please complete our Ask A Question form.

Construction Bonds in General
Bonds used in construction provide financial security and construction assurance by assuring project owners that contractors will perform the work and pay their subcontractors, laborers, and material suppliers. Bonds used to guarantee construction projects fall into the categories listed below.

What is a Bid Bond?
Guarantees that the contractor if awarded the contract, will enter into the contract and furnish the required Performance and Payment bond. If the contractor does not enter into the contract, the contractor and Surety are responsible to the Obligee for the difference in bid spread up to the penalty of the bond.

What is a Performance Bond?
Guarantees the contractor will faithfully perform according to the terms and conditions of a written contract. These bonds automatically provide one year maintenance protection. Performance bonds can be written by themselves or in conjunction with a Payment Bond or a Maintenance Bond.

What is a Payment Bond or Labor Material Payment Bond?
Guarantees the contractor will pay for certain labor and materials used in the completion of the work the contractor is obligated to perform.

What is a Maintenance or Warranty Bond?

Guarantees project to be free of defects in workmanship or materials. If written with a Performance bond, there is no premium charge for the first year's maintenance. There will be a chare if written without a Performance bond, or if the covered maintenance term exceeds on year.

What is a Supply Bond?

In the event the Performance bond guarantees the supply of a product instead of construction, the bond is known as a Supply Bond.