The purpose of this document is to help contractors better understand the bonding process, the different types of bonds and how to maximize bonding capacity within your companies. The length of time it takes to obtain a surety bond depends on the specifics of your business and how quickly you can provide the Bonding Agent with the information required. Occasionally the Agent will discover information about your business that may negatively impact your ability to obtain a bond, however a good Bonding Agent should be able to identify these issues early on. The process can take anywhere from a few days to a few months.
Getting preapproved for bonding does not typically cost anything. However, once you identify a specific project to bid on, you will need to pay a premium to obtain a bond. The bond premium is a percentage of the total bond value. This cost can range from 1/2% to 15% depending on various factors, including your business’s financial health and the nature of the project. In many cases the cost of the bond is in a tiered structure whereby smaller bonds cost a larger percentage and larger bonds cost a smaller percentage.