As the construction industry remains slow, contractors are forced to bid on as many jobs as possible. Some of the better opportunities require bonds just to bid, even if the bid is ultimately lost. If your bid is accepted, you may be required to provide evidence of bonds in addition to the bid bond and contractors license bond. Examples include Performance bonds, encroachment bonds, and payment bonds.
How much do these bonds cost? Unfortunately there is no simple answer. The cost will be based on the size of the job, the risk of the job, and sometimes on your business’ and/or your personal credit and financial strength. Additional factors include the type of contracting you are involved in (B license, etc), and how often you require bonds.
In many cases the bid bond itself will not cost anything, but some bonding companies charge a fee for each bid, sometimes $100. If your bid is accepted and a performance bond is required, the cost will be based on the size of the bond, usually 1-2% of the contract amount. The percentage cost generally drops as the size of the contract increases.
The good news is that most of these bonds are not too difficult to get, or at least to apply. That part is generally free. Once the initial process is completed, subsequent bonds are much easier. If your credit worthiness is not acceptable, there are other markets that are potentially available. The cost may be higher, but if you can secure the bond, you can get to work.
Let us know if you would like to get the bonding process started. It should be pretty painless and we are happy to help. You can call or click the link to bonds above.