A performance bond is a promise that you will finish a job the way the contract says. If you do not, the bond pays to get the work done. It is common on public and large private projects.
- Who needs it
- Contractors on public and large private jobs
- Typical bond amount
- Equal to the contract value
- What you pay
- About 1% to 3% of the contract
- Term
- Length of the project
- A claim protects
- The project owner
What is a Performance Bond?
A performance bond protects the project owner. If you start a job and cannot finish it, the bond company steps in. They may pay to hire someone else to complete the work, up to the bond amount.
This bond is often paired with a payment bond. Together they are called P and P bonds. They are standard on government jobs.
Who needs a Performance Bond?
Contractors who build or repair things for a city, state, or private owner usually need one. Public projects almost always require it. On federal jobs over $150,000, the Miller Act makes it the law.
Owners ask for the bond so they are not left with a half-finished project and no money to fix it.
How does a Performance Bond work?
Here is how it plays out:
- You win a bid or sign a contract for a project.
- The owner asks for a performance bond.
- Junno Surety reviews your experience and finances and writes the bond.
- You do the work as the contract says.
- If you fail to finish, the owner files a claim and the bond covers completion.
If the bond pays, you repay the bond company. So bid jobs you can handle and keep your schedule tight.
How much does a Performance Bond cost?
The cost is usually 1% to 3% of the contract amount. Bigger and riskier jobs cost a bit more. Junno Surety aims to keep you on the low end, at the industry rate minus 5%.
Your rate depends on your credit, your finances, and your track record. We will review your job and quote you fast.
What happens if someone files a claim?
A claim happens when an owner says you did not finish or did not build to the contract. The bond company investigates. If the claim is valid, they pay to complete the work, and then you pay them back.
How to get your Performance Bond from Junno Surety
Junno Surety helps contractors get bonded for the right jobs. Send us your contract details and basic financials. We can often turn around a bond quickly so you do not lose the project.
We are a licensed surety bond agency and can often issue your performance bond the same day. Start your free quote → or call (762) 499-0237.
Things to know about a Performance Bond
Getting approved for a performance bond is partly about the numbers and partly about trust. The bond company wants to see that you can finish the job. They look at your credit, your finances, and your past work. The good news is that a strong track record opens the door to bigger jobs and better rates. Start by bonding the jobs you can clearly handle, then build your bonding history over time. Keep your books clean and up to date, because the bond company will ask for them. The more organized you are, the faster your approvals go and the more work you can chase.
Frequently asked questions
How much does a performance bond cost?
Usually 1% to 3% of the contract price. Your credit, finances, and experience set the exact rate.
Do I need a payment bond too?
Often yes. Public jobs usually require both a performance bond and a payment bond, sold together as P and P bonds.
What do you need from me?
Your contract details and some basic financial information. Larger jobs may need more paperwork.
What is the Miller Act?
It is a federal law that requires performance and payment bonds on most federal construction jobs over $150,000. Many states have their own version too.
How big a job can I bond?
It depends on your finances and history. As you complete bonded jobs, your bonding limit usually grows, so you can take on larger projects.