Your Trusted Partner for Payment & Performance Bonds
Southwest Bond Services is the leading payment & performance surety bond agency, able to provide all of your bond needs.
We have many options for job sizes starting at $100,000.00 and into multi-millions.
Nothing is more important to us than getting your bond approved at the lowest rate possible and in many cases, approved same day!
What Is a Payment and Performance Bond?
A performance bond is an assurance by the principal and the principal’s surety company that the work will be performed and completed in accordance with the terms of the contract..
A payment bond, on the other hand, is an assurance by the principal and the principal’s surety that labor and materials in connection with the contract will be paid. It is the subcontractors and suppliers who benefit from a payment bond. The owner may also benefit from the payment bond since there is less of a chance of a lawsuit or mechanic’s lien if the subcontractors and suppliers are paid.
Why Do You Need a Payment & Performance Bond?
Payment & Performance Bonds are typically required due to either federal or state laws. In some cases, they may be required on private commercial projects by the owner, a lender, or the general contractor.
For all cases, they require these bonds in order to protect themselves from any losses sustained due to the bonded principal’s inability to complete a project, poorly executed work, and/or failure to pay its subcontractors and suppliers.
It is important to know whether or not either or both of these bonds will be required so a principal can include the cost of the bond in their estimate and know that they will be able to provide the bonds when prompted.
Who Can Apply for a Payment & Performance Bond and When?
Anyone in need of a payment and/or performance bond can apply. The contract amount will determine what information we need in order to approve your request.
We can approve bond amounts up to $1,000,000.00 based on credit history alone. Anything above that number will require additional financial information.
We also have options for those that don’t qualify due to credit history or financial presentation.
How Much Does a Payment & Performance Bond Cost?
The cost of payment and performance bonds varies depending on the applicant’s credit history, financial presentation, and overall bond risk. Credit based programs range from 2%-3.6% of the contract.
A qualified company can expect a sliding scale that would significantly reduce the cost of the bond.
Payment & Performance Bond FAQs
Can payment and performance bonds be required for private construction projects, or are they only for public projects?
Payment and performance bonds can be required for private commercial projects as well as public projects. Residential projects will sometimes require performance bonds that have to do with certain right of way permits or encroachment permits. Likewise, developers may be required to provide performance bonds to the city in which they’re developing a project.
What are the typical terms and conditions of payment and performance bonds?
Anyone purchasing a payment and performance bond will be required to have their credit history and financial statements reviewed, depending on the size of the contract. All owners are required to indemnify the surety of any losses incurred.
How long do payment and performance bonds remain valid after a construction project is completed?
Payment and performance bonds are valid during the length of the project and subsequent warranty period.
What steps should a subcontractor take if they have not been paid for their services on a project covered by a payment bond?
They should contact the surety on the payment bond who will then advise them of the next steps.
How do payment and performance bonds benefit project owners specifically?
Payment and performance bonds offer owners security that the project will be performed pursuant to the contract and all subs and suppliers will be paid which most likely eliminates the potential for a lien to be filed. In the event that the principal does fail to perform the contract or pay its subs and suppliers, the bond makes for an easier route to recoup their losses versus taking the principal to court.
Do You Need a Payment and Performance Bond? Have Questions?
Talk to Our Bond Experts at (623) 974-6453