What to Know About Performance Bonds?

Written by caitlynwilliams

If you are working in the construction industry, then your company would need to get a performance bond. This is a guarantee that the project will be finished satisfactorily and correctly by the chosen construction company. You should know what these are and how much you would need to have covered before you start any projects. Here is everything that one needs to know about these so that you can get to work.

What Is It?

You should know what a performance bond is and it is issued to you by a bank or your insurance company that is a guarantee given to the manager or owner of the project. This will let them know that you are planning on meeting all of your obligations that are written in the contract. You will need to put something up in terms of collateral like real estate or another investment. After you complete this purchase, then you are more than ready to start the project. If the project isn’t completed completely or to the satisfaction of the owner, then the bond would be paid out by the bond company and you are required to repay them.

What Documents are Needed?

If you are working in the government or private construction sector, then you need to make sure that you know how you can get a performance bond. This would mean that you would need to provide some documentation before one is given to you, such as:

  • Copy of the current contract

  • Completely filled out surety application

  • Financial documents prepared by an authorized CPA for the previous 2 years

However, what documents you would need in the end is dependent on the type of project that you are going to be working on it. Make sure to ask the bank or insurance company just what you need to give them.

vIt is important that you know what you would need to do to get covered in the construction industry, especially if you want to work in the government industry. You would need to deal with an insurance company or even a bank that can help to issue you one of these for your upcoming project. Go ahead and ask them about which documents you would need to provide them before they can issue it for you, which can vary depending on the current project that you are going to be working on.

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