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A Supply Bond is a type of contract bond that is often required during a construction project. The supply bond ensures contractors will provide the supplies and materials specified in the initial contract. The supply bond is necessary in order to obtain supplies and materials for new or renovation construction projects.
Contract bonds hold all parties accountable for their part in completing a construction project. From contractors to suppliers, each individual party will most likely be required to obtain some type of contract bond to ensure the project is completed according to the initial project scope and agreement.
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The cost of any bond, including supply bonds, varies on a few different components. Typically with a supply bond, the surety will consider who the applicant is, their personal credit history, financial history, surety history, and total cost of the bond to determine the premium of the bond.
Generally, a supplier can expect to pay 0.5% to 3.0% of the total contract value.
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A Supply Bond is required because it guarantees that the contractor who wins the bid not only has the intent but the ability to provide the supplies and materials under the terms the parties agreed on. If the supplier doesn’t abide by the agreed-upon terms, the project owner can recoup the cost differential between the original and a secondary supplier.
A supplier must provide the materials for the project in a specific time, to the specific standards as agreed to in the contract. If the owner of the project at any time feels as though the supplier is not abiding by the contractual agreement, he can make a claim against the supply bond.
Many supply bonds do not require financials and can be approved within an hour.
Questions? Call us today at (877) 841 6745 where a member of our staff is waiting to help you.Supply Bond Online Application