PAYMENT & PERFORMANCE BONDS

PAYMENT & PERFORMANCE BOND

American Surety Bonds Agency helps contractors secure payment & performance bonds for awarded construction contracts nationwide. Because requirements vary by obligee, project, and contract specifications, our underwriting team reviews your contract documents and financial profile before determining your bond amount and next steps.

A Payment & Performance Bond is a blanket term for two separate contract bonds that are typically issued together:

• Performance Bond — guarantees the contractor will complete the project according to the terms and conditions of the contract.
• Payment Bond — guarantees the contractor will pay all suppliers, subcontractors, and material suppliers associated with the project.

Together, these two bonds protect both the project owner (who is assured the work will be completed as contracted) and the subcontractors and suppliers on the project (who are assured they’ll be paid), which is why they’re almost always required and issued as a pair.

This bond goes by several names depending on the obligee or the governing contract form. You may also see it called:

• Performance and Payment Bond
• P&P Bond

These all refer to the same pair of bonds described on this page — the terminology and word order differ by obligee and contract type, not by bond function.

Payment & Performance Bond requirements are set by federal, state, and local procurement law for public contracts, and by the project owner’s own requirements for private contracts.

This bond may serve several purposes, including:

• Meeting the Miller Act requirement (40 U.S.C. 3131-3134) that contractors furnish both a performance bond and a payment bond on federal construction contracts exceeding $150,000, per FAR 52.228-15 and FAR 28.102-2
• Meeting a bonding requirement under a state “Little Miller Act” on state and local public contracts, which generally mirror the federal Miller Act’s requirements at a lower dollar threshold
• Meeting a bonding requirement stated in AIA Document A312 on private projects
• Guaranteeing project completion to the owner and payment to subcontractors and suppliers, reducing the risk of mechanic’s liens and unpaid claims on the project

Your contract or bid specifications will state whether a Payment & Performance Bond is required. American Surety Bonds Agency assists with the bond application and underwriting process.

These bonds are underwritten individually, based on the contractor’s financial profile and the scope of the awarded contract. To apply, you’ll typically need:

• A completed Payment & Performance Bond request
• A copy of the contract
• A job cost breakdown
• Bid results (if applicable)
• Current work on hand (within the last 30 days)
• A current certificate of insurance
• Personal and business financial statements — including credit history and net worth information — if applicable

Along with these documents, underwriters weigh your bid amount, personal and corporate credit history, net worth, and assets; your previous experience; and the project’s scope of work.

You can apply either way: the Fast Track application for an awarded contract amount under $250,000, or the Bond Kit for contracts of any size or scope. After reviewing your application, the underwriter may request additional supporting financial or project documents, and will advise if any further underwriting requirements apply.

Payment & Performance Bond premiums are individually underwritten, with rates typically starting at less than 1% of the contract amount and ranging upward depending on the bond amount, project scope, and the applicant’s financial profile. At American Surety Bonds Agency, we work with a wide array of markets — from preferred clients to non-traditional clients and everyone in between — to help find the right rate for your bond.

Obtaining your bond through American Surety Bonds Agency is simple:

1. Complete the online application — our Fast Track application for an awarded contract amount under $250,000, or the Bond Kit for contracts of any size or scope.
2. Our underwriting team reviews your contract documents, financial information, and project history.
3. Once approved, review your rate and finalize your bond.
4. Receive your completed bond to submit with your contract.

American Surety Bonds Agency has been helping contractors meet their bonding requirements for decades. Whether you’re securing your first Payment & Performance Bond or managing multiple active contracts, our experienced team is here to make the process simple and efficient.

When you choose American Surety Bonds Agency, you’ll receive:

• Experienced surety bond professionals
• Competitive rates from leading surety companies
• Fast underwriting and responsive customer service
• A secure online application process
• Assistance throughout the bonding process

Above all, we’re committed to helping you meet your bonding requirement quickly and correctly, with experienced guidance every step of the way.

Contact American Surety Bonds Agency toll-free at (877) 201-8976 or our Atlanta office at (404) 486-2355. Our team can answer questions about your specific Payment & Performance Bond and project details and walk you through the application process.