By Liberty Union Insurance Group, Inc. · Published · Updated
The contract value is not the premium
A $1 million project does not have one universal performance bond price. The surety evaluates the contractor, contract terms, financial condition, experience, project duration and required forms. Liberty Union Insurance Group, Inc. can help prepare a request that states exactly which bonds are needed.
For arithmetic only, if an assumed rate were 2% of a $1 million contract, the calculation would be $20,000. This is not a quoted, typical or available rate. Actual pricing may use tiers, minimums or other charges. Obtain a written proposal and ask whether it includes both performance and payment bonds.
Can a new contractor qualify?
Possibly. A new firm is not the same as an inexperienced team. Show relevant completed work, management experience, working capital, credit information and a realistic project plan. Approval and capacity remain subject to underwriting.
SBA’s Surety Bond Guarantee program supports eligible small businesses through participating sureties. Ask whether an available market or program fits your circumstances; this site does not represent that Liberty Union is an SBA-authorized participating agent.
What helps a reviewer understand your business?
Send complete, consistent information. Explain unusual financial results, large changes in workload and how the project will be funded. Identify material deposits, subcontractor commitments and the time between paying job costs and receiving progress payments.
A rushed request missing contract terms is harder to evaluate. Start with the deadline, required forms and project details, then arrange secure delivery of sensitive financial records. Do not put account numbers or tax returns in the website inquiry form.
Questions business owners ask
Can I get a bond just by paying a fee?
No. Payment alone does not establish approval. A surety must accept the obligation and issue the required bond.
Should I send the bond form before bidding?
Yes. Early review helps identify wording and capacity issues before you commit. Provide both bid and final bond requirements if available.
Sources and further reading
Educational information. Policy terms and applicable law control; this is not an individual coverage determination or legal opinion.