A performance bond guarantees the owner that your project gets finished per the contract. We quote your specific job and build capacity for growth, including tougher credit and newer contractors.
Premium is a percentage of the bond amount, set by underwriting. The figures above are statutory amounts, not what you pay.
What a performance bond does
A performance bond is the owner's guarantee that the work will be completed as agreed. It is usually required on public works and is common on larger private jobs, typically paired with a payment bond. If the contractor defaults, the surety ensures completion and then seeks reimbursement from the contractor.
What drives the rate
Performance bond premiums are a percentage of the contract value. The biggest factors:
Contract size and duration
Your credit and financial strength
Your track record on similar work
Work on hand and remaining capacity
Building capacity for growth
The bigger the job, the more underwriting matters. As a broker we put together a surety program that grows your single-job and aggregate limits over time, and we shop the markets that handle hard-to-place files. Bidding work that is bigger than your current line? That is a conversation worth having early.
Bad credit or a prior claim? We place it.
Declined by an instant-issue site does not mean declined everywhere. We shop hard-to-place markets and work with credit challenges. Underwriting still applies.
Reviewed by Michael Melshenker, CEO. Figures verified against CSLB and CA DOI sources.
What is a performance bond?
A performance bond guarantees the project owner that the contract will be completed on its terms. If the contractor defaults, the surety must finish the work, fund a replacement contractor, or pay the owner's loss up to the penal sum, commonly up to 100% of the contract.
How much does a performance bond cost?
Premium is a percentage of the contract amount, billed once at issuance rather than annually, and it scales with the contractor's financial strength and the size of the job. Stronger statements and more working capital move the rate down. It is priced on the contract, not on a credit score alone.
Who requires a performance bond?
Public owners require them on bonded public works. Private owners, developers, and construction lenders require them on larger contracts. General contractors also require them from subcontractors whose scope is big enough that a default would put the schedule or the budget at risk.
How fast can a performance bond be issued?
With a bonding line already approved, a bond for a project inside that capacity can issue in a day or two. A first submission from a contractor with no surety relationship takes materially longer, because the surety underwrites the company before it underwrites the job.
Can I get a performance bond with bad credit?
Personal credit matters less here than on a license bond. Sureties underwrite capital, capacity, and character: CPA-prepared financials, a clean work-in-progress schedule, and a bank line. Where credit or a short history is the obstacle, the SBA Surety Bond Guarantee program exists for exactly that file.
Should I use a surety broker or apply direct for a performance bond?
Contract surety is not sold direct. Carriers underwrite through appointed producers, and the producer packages the file (statements, work-in-progress, questionnaire) and places it with the market most receptive to that profile. MM Bonding holds direct appointments with several contract markets, so one submission reaches more than one underwriter.
What documents does a performance bond require?
Business financial statements, ideally CPA-prepared; a work-in-progress schedule showing costs and billings to date; the surety's contractor questionnaire; personal financial statements and indemnity from the owners; and bank and CPA references. The contract and bid spread come with the specific project.
Why was my performance bond declined?
Most declines trace to a few causes: the project is larger than approved capacity, working capital is thin, the work-in-progress schedule shows losses or heavy underbillings, or statements are internally prepared where the size calls for a review. Each is fixable, and each takes a different remedy.
When is a performance bond released?
It stays in force until the obligations it guarantees are complete, normally final acceptance plus any warranty or maintenance period in the contract. On California public works, retention release runs under Pub. Contract Code §7107, and consent of surety on AIA G707 is generally required before final payment.
What does a performance bond pay, and to whom?
It pays the project owner, up to the penal sum. The surety may finance the original contractor, tender a completing contractor, or pay the owner's excess completion cost. It never pays the contractor, who reimburses the surety for everything it pays out.
How do I verify a performance bond is genuine?
Confirm the surety is admitted in California through the Department of Insurance, or approved for federal work where that applies, and that a current power of attorney for the signing attorney-in-fact is attached. Then call the surety on a number from its own website, not one printed on the bond.
What is the difference between a performance bond and a payment bond?
A performance bond protects the owner against the work not being finished. A payment bond protects subcontractors and suppliers against not being paid. They are issued together on most bonded jobs (commonly called P&P bonds), each typically at the full contract amount, and they protect different people.
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