Performance Bond Complete Guide for Contractors
A performance bond guarantees that you, the contractor, will complete the project per the contract terms. Required on most public-works projects, often required on private commercial jobs over $100K.
What a performance bond covers
If the contractor fails to complete the contract — bankruptcy, default, abandonment — the surety steps in to either (a) finish the work using a replacement contractor, or (b) pay the project owner the cost to complete, up to the bond amount (typically 100% of the contract value).
Who needs one
• Federal contractors under the Miller Act (any contract over $150K) • State and municipal contractors under each state's Little Miller Act • Private commercial owners frequently require them on builds over $100K • Subcontractors when the GC requires them
What it costs
Premium is typically 0.5%–3% of the bond amount per year, depending on the contractor's: • Personal credit (FICO) • Business financial statements • Bonding capacity history • Project complexity
New contractors with no bonding history often pay 3%–5% until they build a track record. Established contractors with strong financials can pay under 1%.
How to qualify
1. Personal financial statement 2. Business balance sheet + P&L (2–3 years) 3. Schedule of work in progress 4. Reference letters from prior project owners 5. Bonding line application with the surety
Noah Insurance Agency walks new contractors through the SBA-bonded-contractor program for jobs up to $9M when traditional sureties decline.
Get a performance bond quote
We write performance bonds through CNA Surety, Old Republic, Liberty Mutual Surety, and the SBA bond guarantee program. Call 814-718-0060 or quote at noahia.com.
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