A Performance Bond secures the contractor’s promise to complete the contract in line with its terms and conditions, at the agreed upon price, and within the time allowed. A Payment Bond promises payment to certain laborers, material suppliers and subcontractors. The payment bond is protection working claimants have if they are not paid for the goods and services they provide to the project. In most states these bonds are required.

Hickman, Johnson and Simmonds’ team can give valuable information on the best use of these bonds for upcoming construction projects, no matter how large or small.

For the vast majority of investors, bonds serve a single, overriding role — as ballast. True, bonds function well for income seekers, and, in the hands of an adept speculator, they can beat the stock market for long stretches. But most importantly, bonds help keep a stock-focused portfolio sturdy — steadily, predictably sailing toward long-run returns. 

Performance Bonds:

A performance bond is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor. For example, a contractor may cause a performance bond to be issued in favor of a client for whom the contractor is constructing a building. If the contractor fails to construct the building according to the specifications laid out by the contract (most often due to the bankruptcy of the contractor), the client is guaranteed compensation for any monetary loss up to the amount of the performance bond. Performance bonds are commonly used in the construction and development of real property, where an owner or investor may require the developer to assure that contractors or project managers procure such bonds in order to guarantee that the value of the work will not be lost in the case of an unfortunate event (such as insolvency of the contractor). In other cases, a performance bond may be requested to be issued in other large contracts besides civil construction projects.

License Bond:

A License Bond is a sub-category of bond types. They fall under the commercial category of bonds and guarantee the principal will abide by the terms of the license they file the bond for. Some of the more popular License bonds are: Auto Dealer Bonds, Contractor License Bonds, Mortgage Lender Bond, Mortgage Broker bonds, etc.

Bid Bond:

A bid bond is a debt secured by a bidder for a construction job or similar type of bid-based selection process for the purpose of providing a guarantee to the project owner that the bidder will take on the job if selected. The existence of a bid bond provides the owner with assurance that the bidder has the financial means to accept the job for the price quoted in the bid.

Liquor Liability Bond:

A liquor bond is required by the government to participate in the sale, manufacturing, or warehousing of liquor. The bond protects the government in the event that the principal is maintaining fraudulent records or is unable to pay on previously collected funds. State governments typically require this bond, which is considered a financial guarantee.

Utility Bond:

A Utility Bond is a long-term debt security that is issued by a utility. Utility bonds, like industrial bonds, range the full spectrum with regard to credit quality. Some utility companies have been able to successfully overcome more difficult times associated with bringing large construction projects into their ratepayers’ rate base, thus enabling the companies to pass on to these ratepayers the costs of constructing the projects.

Judicial Bond:

Surety deposited by a party to a lawsuit to indemnify the opposing judicial or governmental body party from any loss arising from delay or deprivation caused by the legal proceedings. In general, all bonds required in judicial proceedings are called judicial bonds.