Top Reasons Why You Need A Payment Bond To Obtain Projects

By Author: Charles Maverick
Total Articles: 45
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If your construction firm regularly bids on government projects, then you need to pay particular attention to payment bond. That is because all federal and state projects require that a contractor should post surety payment bond. This type of bond is also being required by some private companies to contractors. On the other hand, if you only have infrequent bond requirements, then you have to consider getting express bonds from surety companies such as the Baldwin-Cox Agency.

A payment bond was institutionalized through federal and state statutes primarily to protect and to benefit materials suppliers, labor, and subcontractors. As a contractor of a project, you have the obligation to pay these entities based on the provisions laid out in the project contract. It serves as a guarantee that the subcontractors and suppliers will have adequate protection from delinquent contractors or if the principal contractor of the project becomes insolvent and cannot continue the business. You have to take note though that a payment bond is not an insurance policy. So there are limitations to the claims that can be made by ...
... the subcontractors, suppliers, and labor.

So how does a payment bond work? Well, there are three parties to this kind of surety bond. The Principal of the bond is the contractor while the Surety is the bond provider or the company backing up the contactor. The Obligee is the project owner and the one requiring the posting of bond before a project is awarded. An obligee can be a government agency or entity with existing projects or a private entity engaged in construction projects. If the principal fails to pay the subcontractors and suppliers as stipulated in the project contract, then these entities can claim from the surety bond. The surety will recover its losses by taking out the bond posted by the principal.

You will surely need this type of surety bond if you want your company to participate in government bidding procedures. You cannot obtain contracts from government agencies or from private companies if you cannot offer payment guarantees for your subcontractors and suppliers. However, a surety bond is usually an overhead expense that you have to absorb. If you need an affordable and quick solution for your payment surety needs, then express bonds could be your best option. Express bonds are being offered by Baldwin-Cox Agency. Normally, application for express bonds can be approved within 24 hours as long as you have good credit rating. So this option provided by Baldwin-Cox Agency can help you to quickly bid for projects with payment bonds requirements.

Surety bonds ensure that your company will have a greater chance of securing a contract for a project. Besides, you cannot possibly get a government contract if you cannot post a bond. This is a requirement and mandated by existing statutes. If you need a quick bonding solution, just take advantage of the express bond package offered by Baldwin-Cox Agency. This is a good alternative compared to comprehensive surety bonds especially if your company only has infrequent bonding requirements.
If you want to quickly get surety bonds, then the express bonds service of Baldwin-Cox is best for you. Visit or website today and find out why you need to obtain payment bonds to secure project contracts.