A surety bond is a three-party instrument between a surety, the contractor
and the project owner. The agreement binds the contractor to comply with the
terms and conditions of a contract. If the contractor is unable to successfully
perform the contract, the surety assumes the contractor's responsibilities
and ensures that the project is completed. Below are the four types of contract
bonds that may be covered by an SBA guarantee:
1. Bid - Bond which guarantees that the bidder on a contract will enter into
the contract and furnish the required payment and performance bonds.
2. Payment - Bond which guarantees payment from the contractor of money to
persons who furnish labor, materials equipment and/or supplies for use in
the performance of the contract.
3. Performance - Bond which guarantees that the contractor will perform the
contract in accordance with its terms.
4. Ancillary - Bonds which are incidental and essential to the performance
of the contract.
Learn About
SBA's Surety Bond Program
Visit
SBA's Office of Surety Guarantees |