How Do You Get Bonded as a Contractor?

A contract bond has three parties: you (the principal), the GC or owner who is protected (the obligee), and the surety that backs your promise. A performance bond protects the GC if you don't finish your scope; a payment bond protects your own suppliers and lower-tier subs if you don't pay them; a bid bond backs your promise to sign the subcontract at the price you bid. Unlike insurance, the surety expects you to pay it back for any claim it pays, which is why underwriting looks so closely at your balance sheet.

Bonds are a public-works habit first. Under FAR 28.102-1, the federal bonds statute "requires performance and payment bonds for any construction contract exceeding $150,000", and between $35,000 and $150,000 the contracting officer picks two or more payment protections. That is the prime contractor's duty; whether you must bond your subcontract is up to the GC, and the subcontract or the invitation to bid says so.

1. Find a surety agent or broker who writes contract bonds for contractors your size, not only license or notary bonds. Ask other subs and your CPA who they use.
2. Put the packet together: year-end financial statements (larger lines usually want them prepared by a CPA), interim statements, a work-in-progress schedule with each job's contract, billings, cost to date and estimated cost to complete, a list of completed jobs with references, your bank line, and résumés of the people who run the work.
3. Expect to sign a general indemnity agreement. The company signs, and owners and their spouses are often asked to sign personally.
4. Get your line: underwriters set a single-job limit and a total for all bonded work in progress. Ask what would raise it, such as a CPA review instead of a compilation, or more working capital.
5. For each job, send the agent the subcontract or invitation and the bond form the GC requires. Read the form: some GCs use their own, with terms beyond the subcontract.
6. On a federal job, check that the surety is on Treasury's Circular 570, the list of companies that write or reinsure federal bonds.

Circular 570 matters because FAR 28.202 says corporate sureties on bonds furnished with federal contracts "must appear on the list", and the bond's penal amount should not exceed the surety's underwriting limit stated there unless the excess is coinsured or reinsured. Treasury's Circular 570 page says the list was updated on August 1, 2026; check it again on the day you bond a job.

If a surety won't bond you yet, the SBA may back it. The SBA "guarantees bid, performance, and payment surety bonds issued by certain surety companies", for contracts "up to $9 million for non-federal contracts and up to $14 million for federal contracts". You must be a small business under SBA's size standards, and you apply through an SBA-authorized surety agency, not to the SBA directly. Performance and payment bond guarantees carry a fee to SBA of 0.6% of the contract price.

The guarantee is to the surety, which is why it opens doors. Under 13 CFR 115.31, SBA reimburses a prior-approval surety for 90% of its loss when the contract is $100,000 or less, or when the bond is for a small business owned by socially and economically disadvantaged people, a certified HUBZone business, or a veteran-owned or service-disabled veteran-owned business; otherwise up to 80% on contracts over $100,000.

Check the arithmetic the same way for your job: the fee is 0.6% of the contract price, so a $250,000 subcontract carries a $1,500 fee. Had Kestrel been a certified HUBZone business, the surety's guarantee would have been 90%, which can be the difference between yes and no on a first bond.

• Calling the agent the week of bid day. A first line takes time to underwrite; start before you need it.
• A work-in-progress schedule that doesn't tie to the financial statements. Underwriters notice.
• Signing the GC's bond form without reading it. It can add obligations your subcontract doesn't have.
• Forgetting that a payment bond is a promise to pay your suppliers. Unpaid suppliers claim on it, and the surety then comes to you.

For the rest of what a GC asks for at award, see what paperwork a GC requires from a sub. For bidding the job itself, see how to bid a GC's job as a subcontractor, and the subcontractor's guide for every step after.

Getting bonded is underwriting, not paperwork: a surety agent takes your financials, work in progress and history to a surety, you sign an indemnity, and you get a line to bond jobs within. Start before bid day, and keep the work-in-progress schedule current.

If no surety will take you on yet, the SBA's guarantee program, through an SBA-authorized agent, was built for that, at 0.6% of the contract price for performance and payment bonds.

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1. Surety bonds — U.S. Small Business Administration. Read October 22, 2026.
2. 13 CFR 115.31, Guarantee percentage — Electronic Code of Federal Regulations. Read October 22, 2026.
3. FAR 28.102-1, General (bonds for construction contracts) — Acquisition.gov. Read October 22, 2026.
4. FAR 28.202, Acceptability of corporate sureties — Acquisition.gov. Read October 22, 2026.
5. Department Circular 570 — Bureau of the Fiscal Service, U.S. Department of the Treasury. Read October 22, 2026.