Bid, Performance, and Payment Bonds Explained
Contract bonds are guarantees involving the contractor, the project owner, and a surety. They do not replace insurance, and the three common bond types protect different stages of a project.
Bid bond
A bid bond supports the bidder’s commitment to enter the contract and provide required performance and payment bonds if selected. The solicitation controls the amount, form, surety, and submission method.
Performance bond
A performance bond protects the owner against the contractor’s failure to perform the bonded contract, subject to the bond’s terms and applicable law.
Payment bond
A payment bond protects covered subcontractors and suppliers against nonpayment. Claim procedures and deadlines are legal matters that vary by bond and jurisdiction.
Getting bond-ready
- Build relationships with a surety agent and financial professionals early
- Maintain current financial statements, work-in-progress reports, and project history
- Evaluate one-project and aggregate bonding limits
- Include bond premiums and administrative requirements in estimating
- Never alter a required bond form without approval
SBA support for eligible small businesses
SBA’s Surety Bond Guarantee Program supports qualifying small businesses by guaranteeing certain bonds issued through participating sureties. Eligibility, contract limits, underwriting, and fees are governed by the current program rules.
Official sources and further reading
This overview is educational and is not legal advice; it cannot determine whether a law, certification, wage rule, or solicitation requirement applies to your business. Rules differ across federal, state, and local procurement and can change. Verify the current official solicitation and consult the issuing agency or a qualified adviser when needed.
Find bids across New England
Browse Live Bids to see the current public inventory without an account, or start from the New England government bids hub and pick a state: