Description

Contract bid bonds are frequently required by project owners in order to bid on their projects. A bid bond requires that you complete a credit-based application. If you have good credit and the project is relatively small, you will likely be approved based on a simple submission. If the project is large or your credit is not strong, the application process will be more involved.

In most cases, the bid bond ensures that you will honor the project owner’s bid terms if you are the lower bidder. This usually means that you will need to provide a payment and performance bond to guarantee the project terms.

Bid bonds are usually offered at no cost since the surety is expecting to replace the bid bond with a payment and performance bond, which will generally run 1.5 to 3.5% of the project cost, depending on size, complexity, maintenance, contractor character and credit, and other factors.