What is a Payment & Performance Bond?
A Payment & Performance Bond combines the assurances of both Payment and Performance Bonds, offering a complete financial safeguard for project owners. With this bond, owners are covered against contractor payment defaults and performance failures in a single, convenient package. This dual bond helps streamline the process and provides added security for complex projects where both payment and performance are critical.
Southwest Bond Solutions is proud to be recognized as an SBA Authorized Agent. This designation enables us to provide streamlined bonding solutions with greater flexibility and competitive rates for small businesses. Click here to learn more.
How to get a Payment & Performance Bond in 3 easy steps with Southwest Bond Services
Request a Quote
Fill out our online form or give us a call to request a free quote. Our team will promptly assess your requirements and provide you with a competitive quote tailored to your specific circumstances, ensuring clarity and transparency throughout the process.
Provide Required Information
Provide the necessary information requested by our team. Whether it's details about your project, business, or personal information, rest assured that your data will be handled securely and confidentially to facilitate a smooth experience.
Pay & Sign
Complete the process by making your payment for the bond premium and signing the required documents. Our team will guide you through the each step of the process to ensure accuracy and compliance with all legal and contractual requirements.
Who Needs a Payment & Performance Bond?
Most often, general contractors and subcontractors are who need payment and performance bonds. If they are contracted with public entities, payment and performance bonds are required by law for jobs over $100,000.00. Private work may also require performance and payment bonds depending on the owner, lender or funding source.
How Much Does a Payment & Performance Bond Cost?
Payment and Performance bond costs are a percentage of the contract price. Typically, the rate ranges from 1-3% depending on credit history and/or financial presentation. We partner with the SBA, which allows us to obtain approval for bond requests that may not be able to obtain approval in standard markets due to bad credit and/or insufficient working capital.
Payment & Performance Bond FAQs
How Does a Payment & Performance Bond Work?
Payment and Performance bonds are issued once a contractor has been awarded a job and contract has been issued or is pending. Basically, they follow the contract and ensure that the contract will be executed as written. The bonds stay active until the warranty period has expired.
The bond amount will also follow whatever the final contract price is meaning change orders that increase or decrease the contract amount will also increase or decrease the bond amount.
Once the work is completed, the surety will request a status report and based on the final contract price, will charge additional premium or return premium.
What Does a Payment & Performance Bond Protect Against?
Performance and Payment bonds are required to protect the owner if the contractor does not perform the work pursuant to the contract and/or does not pay its subcontractors and material suppliers.
Can I Get a Payment & Performance Bond With Bad Credit?
Yes, we work with the SBA which allows us to consider contractors who have bad credit and/or insufficient working capital. We also have markets that will consider the same but some conditions such as funds control or collateral, if necessary.
