Contractors who are bidding on a project may be required to obtain a bid bond before they can join the bidding process.
A Bid Bond guarantees that a contractor is bidding on a project in good faith, and, if awarded the contract, will be able to obtain the requisite Payment and Performance Bonds (such as for an AIA Contract ) that ensures the project is completed according to the contract.
A Bid Bond is often used as a tool to ensure that contractors are eligible to bid on a contract project. The contractor goes through a prequalification process through a surety, in which an underwriter will review various financial documents. These can include a balance sheet, income statement, statement of cash flows, and other pertinent financial documents, plus work that has already been completed, work that is in progress, owner qualifications, equipment, and fulfillment of labor.
The bond is a legal contract between three parties: the project owner (the obligee) requiring the bond, the contractor (the principal) who must purchase the bond, and the surety company (surety) that issues the bond.
SuretyGroup.com has Bid Bond Programs in place to support all contract sizes and classes of business, including new contractors and first time bids (may go through the SBA Program). Our experience and access to credit throughout the U.S. allows us to approve bonds other sureties can't.
Because the surety assumes responsibility when a contractor fails to fulfill his obligations, the surety wants to make sure the contractor is a low risk before issuing a bond in the first place. Underwriters analyze the contractor's documents to determine if the contractor qualifies for the bond, what the premium will be, and if there are any other factors that increase the risk. The underwriter then approves or denies the bond application. If approved, the underwriter determines terms of the approval, which includes the premium to be charged.
Once established, succeeding bids only need the Bid Solicitation Form and a Bid Bond Request Form. Updated financials (corporate and personal) are required if it has been more than a year since the last bond was underwritten.
To get started, call our Surety Bond Specialists at 844-432-6637. We'll help you through the bonding process.
Here is what we need to complete your Bid Bond:
In most cases, SuretyGroup.com can write Bid Bonds at no cost. However, if there are circumstances such as the applicant's personal credit or available finances are not sufficient to meet underwriting standards, a surety may then decide to charge a fee for the bid bond. The premium that you pay for a contract bond will vary in price and is dependent on such factors as business financial statements, experience, work on hand, the amount of the awarded contract and more. Call us to see if you qualify. SuretyGroup.com has a team of Surety Bond Specialists that are ready to help you through the bond process. Contact us for a free quote that fits your specific situation.
Check out our FAQ page or What’s a Surety Bond? page. Should you need or choose to buy a surety bond, buy from us. SuretyGroup.com has been underwriting surety bonds throughout the U.S. for more than 35 years. When you work with us, you enjoy the unique benefit of dealing with a team of highly experienced surety agents with in-house underwriting authority. This allows you to receive competitive, low rates, quick approvals, and immediate bond delivery. In most cases, your bond will be delivered within 24 hours after you apply for it.
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