A surety bond can protect contracts from future uncertainties. A contractor is able to bid and win construction, service or supply contracts from government agencies or private entities. When a contractor is bidding for a certain construction project, he is obliged to meet the conditions relating to fulfilling the obligations to the required standards and in a timely manner. It doesn’t matter what challenges the contractor have to experience he should be able to complete the project to the required standards and within the specific time frame. A surety bond is a kind of collateral given by the contractor to the government or private entity to guarantee the completion of the project. This article provides information on the benefits of a performance bond for contractors.
A performance bond is a kind of agreement signed between the surety company and the contractor guaranteeing the completion of the contract on behalf of a government or private entity. In the event of a default, the surety company is obliged to pay the government or private entity the agreed amount of money as compensation for the delay or negligence on the part of the contractor. In fact, the U.S. Small Business Administration stipulates that a performance bond is a mandatory requirement for a federal contract that exceeds $150,000.
There are over 50,000 types of performance bonds in the United States. Each state has their own regulations as to which type of industry requires a bond before receiving a license. For example, a construction company, real estate brokerage, or a janitorial company require being bonded before conducting their business in the particular state. Any federal contract that exceeds the amount of $150,000 requires a bond. Some private companies also ask for bonds for certain projects. The main purpose of this kind of bond is to ensure that the contractor fulfills the job that he/she was hired to complete.
For example, if a small construction contractor was hired to remodel a customer’s kitchen and he doesn’t finish the project according to the contract, the customer can make a claim on the bond and receive compensation for the project. Even if a small business is not required to be bonded, such a business can benefit from buying a performance bond. For example, if you have employees who handle customer’s money on a regular basis, you should buy an Employee Theft Bond. It will protect you when the customer’s money is lost or mishandled by your employees. On the other hand, you can use the term “fully licensed and bonded” when advertising your business. It will help create more trust in your customer’s mind. These are some of the important benefits of a performance bond.
Bonds Express is a reliable performance bond agency since 1967. The company is committed to providing performance bonds at the lowest price possible. Bond Express offers a wide variety of performance bonds to suit a wide range of industries out there. That’s why you need to check them out right now.