Commercial Bonds

A commercial surety bond is sometimes referred to as a "non-contract bond" because it does not guarantee a specific contract like a construction bond would. However, commercial bonds are more commonly referred to as "license and permit bonds." Specific business owners must obtain a license and permit bond to satisfy both local and state regulations and legally operate their businesses. There are hundreds of types of license and permit bonds, contact us for available bond types.

Why the Bond is Required

Local and state governments require business owners to obtain commercial surety bonds before they can legally conduct business in a specific municipality or state. Commercial bonds typically refer to license and permit bonds, whereas professional licensure allows an opportunity for fraud or misconduct.

For instance, many state governments require a telemarketing bond to ensure that phone solicitors operate legally per the terms of the particular state they are calling. An example of a non-licensed commercial surety bond is a sales tax bond, which most states require to

guarantee a particular company pays sales tax to the government.

Obtaining the Bond

A commercial surety bond is much easier to obtain than a construction bond that backs a multi-million dollar commercial construction project contract. Attaining a commercial surety bond, like a license and permit bond, can be as simple as contacting a surety agency and paying the required fee for the bond.

Construction Surety Bonds

A Construction surety bond or Contract surety bond is a broad category of surety bonding encompassing all types of bonds related to construction projects.  They guarantee that a contractor or developer will fully complete the construction project for which they’ve bid according to specifications and will pay all laborers, subcontractors and suppliers.

Common construction surety bonds are listed below:

•    Bid Bond- a construction surety bond required of a contractor submitting a bid on a project.  The bid bond helps the obligee receive serious quotes since the developer receives the difference between the lowest bid and the next highest bid if the contractor refuses to undertake the project.

•    Payment Bond- a construction surety bond providing security that the sub-contractors and suppliers on a project will be paid.

•    Performance Bond-  a construction surety bond providing security that the winning bidder on a project will complete the contract according to its terms including scope, price and time.

•   Subdivision Bond- guarantees that builders, developers, and individual landowners complete improvements made to a subdivision property. This bond, required by local authorities, usually guarantees that the improvements will be made at the expense of the developer and principal of the bond.

•    Supply Bond- are a type of contract surety bond guaranteeing a supplier will provide the supplies and materials for the purchaser as contracted.  Supply surety bonds protect the purchaser from project losses due to unavailable materials.

•    Site Improvement Bond-  is a construction surety bond that covers public property being worked on by private contractors.  Site improvement bonds guarantee the improvements will be made according to the requirements of the governing authority.

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