Payment and Performance Bonds

A construction project can be ready to move forward, but the required bonds still need to be in place before work begins. Performance and payment bonds help contractors satisfy those contract requirements while giving project owners and eligible subcontractors added financial protection. Circle Surety makes it easier for independent agents and their contractor clients to request quotes online, establish bonding capacity, and obtain bonds for projects across the country.

What Are Performance and Payment Bonds?

Performance and payment bonds are construction surety bonds that guarantee specific obligations under a contract. They are commonly required on public construction projects and may also be requested by private project owners or general contractors.

Although frequently issued together, the bonds serve different purposes:

• Performance bond: Guarantees that the contractor will fulfill the construction contract according to its terms. It protects the project owner if the contractor fails to meet its contractual obligations.
• Payment bond: Guarantees payment to eligible subcontractors, laborers, and material suppliers. It protects these parties if the contractor fails to pay for covered work or materials.

Both bonds are generally issued for 100% of the construction contract amount, although individual requirements vary.

When Are Performance and Payment Bonds Required?

Performance and payment bonds are commonly required for federal, state, and local public works projects. Private owners and general contractors may also require them to reduce the financial risks associated with contractor default or nonpayment.

Federal construction contracts are generally subject to the Miller Act, while states maintain their own public construction bonding requirements, often called Little Miller Acts.

Bond amounts, contract thresholds, and filing requirements vary by jurisdiction. State-specific pages provide more information about local requirements.

Performance and Payment Bonds by State

How Much Do Performance and Payment Bonds Cost?

Performance and payment bond premiums typically range from 0.5% to 3% of the contract amount for qualified contractors, although actual pricing varies. Pricing generally depends on the contractor’s credit, financial strength, experience, existing workload, and project size. Performance and payment bonds are often issued together for a single premium.

Circle Surety works with multiple surety markets to provide bonding options for both established contractors and businesses seeking their first contract bonding program.

Get Performance and Payment Bonds Through Circle Surety

Circle Surety helps independent insurance agents place contract surety bonds for contractors throughout the United States. Our digital platform simplifies quoting and issuance while giving agents flexibility in how they work with their clients.

• Instant bonding line approvals: Qualified contractors can receive instant approval for aggregate bonding lines up to $2 million based on credit and experience. Individual bonds remain subject to project-specific approval.
• Online quoting: Agents can submit applications through their agency dashboard or send contractors a quote link.
• Agency storefronts: Contractors can request quotes through their agent’s branded Circle Surety storefront.
• Larger bonding programs: Full underwriting is available for contractors requiring higher bonding capacity.
• SBA-backed options: Eligible small contractors may qualify for bonds through SBA-guaranteed surety programs.

Once a bonding line is established, contractors can request bonds for additional projects without starting the entire application process again, subject to underwriting and available capacity.

For independent agents: Get appointed with Circle Surety to quote, manage, and issue contract bonds through your agency dashboard.

For contractors: Request a performance and payment bond quote online. Contractors applying directly through Circle Surety are connected with a licensed partner agency.