Who is requiring this bond?
The "Obligee" determines the specific bond forms needed.
Payment Bonds are almost always issued alongside a Performance Bond. Our quote includes both for one single premium.
Why is a Payment Bond required?
On public projects, subcontractors cannot file a "Mechanic's Lien" against government property.
- Miller Act Compliance: Federal law mandates payment bonds for contracts over $100,000 to protect labor and materials providers.
- Lien Substitution: The bond acts as the collateral, ensuring subs get paid without encumbering the real estate.
Applicant Credit Strength
Surety is credit-based. Higher scores equal larger bonding capacity.
Excellent (700+)
Qualifies for standard rates (1-2%) and increased aggregate limits.
Fair (650 - 699)
Eligible for Fast-Track programs on smaller contracts.
Under 650 / Issues
We have SBA Support Programs for challenged credit.
Are business financials required?
It depends on the contract size. We have "Application Only" programs that rely solely on personal credit, allowing us to approve Payment Bonds without seeing your P&L or Balance Sheet.
What is the Contract Amount?
The size of the job determines the underwriting process.
Note: We can issue your Payment Bond immediately after credit approval. It guarantees that you will pay your laborers, material suppliers, and subcontractors.
Need other contractor coverages?
Most projects require GL and WC certificates as well.
How Payment Bonds Protect the "Downstream"
In construction, a "Mechanic's Lien" is a powerful tool for unpaid workers to claim a property. However, on Public Works, property cannot be seized. The Payment Bond is the legal substitute.
Who is protected?
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First-Tier Subcontractors: Contractors hired directly by the Principal (You).
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Material Suppliers: Vendors supplying brick, steel, lumber, etc. to the site.
-
Laborers: Ensures wages and benefits are paid if the contractor defaults.
How much does a Payment Bond cost?
Pricing is based on the contract size and credit. Note that the Payment Bond premium covers the Performance Bond as well (2-for-1 pricing).
Preferred Rate
Of Contract Price
For contractors with strong credit and liquid assets (cash/stocks).
Flat Rate
Of Contract Price
Credit-only approval for contracts under $500k. No financial statements required.
Subprime Rate
Funds Control May Be Required
For contractors with credit issues. We utilize the SBA Bond Guarantee Program.