Surety Bonds for Contractors

A surety bond makes sure a contract gets completed if a contractor defaults. If a contractor can't finish a project, the surety company will find another contractor. If they can't, the client gets compensation for the loss.

There are four types of surety bonds:

• Bid bonds: Make sure bidders enter contracts
• Payment bonds: Make sure contractors pay suppliers and workers
• Performance bonds: Make sure projects get done
• Ancillary bonds: Cover other parts of a contract

The U.S. Small Business Administration (SBA) helps small businesses get surety bonds.