What are Surety Bonds?

A surety bond is a financial guarantee to the obligee on behalf of the surety that the principal will complete a service in agreement with the regulations stated in the surety bond.

Let’s break this down further.

Simply put, a surety bond is an agreement between three parties:

Two types of surety bonds are commercial and contract bonds.

What are commercial bonds?

Commercial bonds can be further segmented into more categories; however, they are often required as a licensing requirement for regulated industries (ex., contractor licenses, motor vehicle dealer licenses, etc.). If the licensed business or individual fails to adhere to licensing laws, any injured party may recover damages from the surety that issued the bond up to the bond amount by filing a valid claim. However, the principal (the business or individual that has the bond) is financially liable for reimbursing the surety for any claims paid out by the surety, plus additional fees or expenses incurred by the surety.

Types of commercial bonds:

License bonds icon
License and Permit Bonds
Probate and court bonds icon
Probate and Court Bonds
Fidelity bonds icon
Dishonesty and Fidelity Bonds
Wage and welfare bonds icon
Wage and Welfare Bonds
Utility bonds icon
Utility Bonds
BOSS Bonds is your go-to source for securing surety bonds with the most efficient, hassle-free experience and the best possible terms. From common bonds to obscure regional ones, we have you covered.

What are contract bonds?

Contract bonds, on the other hand, are most often associated with the construction industry. There are contract bonds for commercial projects, such as security and janitorial contracts; however, for simplicity, we will be using examples from the construction industry here.

Contract bonds are typically required for public construction projects to transfer—from the project owner to the surety company—the liability associated with a contractor backing out of or failing to complete a project as outlined by the contract. For instance, if the contractor uses faulty materials, does not complete the project, or fails to pay their suppliers and subcontractors, the injured party (typically the project owner) can file a claim against the contractor bond to recover damages. Again, the principal on the bond (the contract) is ultimately financially liable for any valid claims.

Types of contract bonds:

Bid bonds icon
Bid Bonds
Payment and Performance Bonds icon
Payment and Performance Bonds
Warranty bonds icon
Warranty/Maintenance Bonds
Development subdivision bonds icon
Development/Subdivision Bonds
Get the bond you need with speed and precision when you choose BOSS Bonds. Our team of solution-oriented professionals is dedicated to understanding and meeting your unique requirements.

Unlock growth with the SBA Surety Bond Guarantee Program.

A resource for the small contractor.

For small businesses in the building contract sector, the SBA Surety Bond Guarantee Program offers a crucial lifeline to securing necessary surety bonds for bidding on both government and private contracts.

Especially beneficial for newer businesses struggling to meet the stringent financial history requirements of traditional bond issuers, the SBA's support can open the door to larger contracts and market expansion.

The SBA Surety Bond Guarantee Program stands out as an invaluable tool for small businesses looking to grow and succeed in the competitive building contracts market.

Take advantage of our unique SBA line of authority with our surety partners and partner with BOSS Bonds for a quicker, smoother bonding process.

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