What is a Bid Bond in Illinois?
A bid bond is one of the types of surety bonds, which guarantees that the bidder will enter into the agreement and complete the contract according to its terms. It provides assurance to the project owner that the bidder has the expertise and ability to complete the job once the bidder is selected after winning the bid. The simple reason is that you need one in order to get the work. But the larger question is why are more owners/developers requiring a surety bid bond? The answer is risk. Given the uncertainty of the marketplace, which includes long-time contractors going out of business, to municipalities filing bankruptcy (or just slow paying), has led to owners being afraid that their contractors will be unable finish the job. So, they require a some protection.
Just fill out our bond application here and email it to [email protected] – click here to get our Illinois Bid Bond Application
A bid bond is issued as part of a bid by a surety bond company to the project owner. The owner is then assures that the winning bidder will take on the contract under the terms at which they bid.
Most bid bonds contain a bid percentage (usually 5% or 10%, is forfeited if you don’t accept the job).
How much does a Bid Bond Cost in Illinois?
Swiftbonds does not charge for a surety bid bond (with two exceptions, see below). The reason that we don’t charge for a bid bond is that we will charge for the surety performance bond if you win the contract. The cost of a P&P bond can vary widely depending on the amount of coverage that is required (see below).
Two exceptions for bid bond charges:
1) We do charge for Overnight fees
2) We will charge you if there is NOT going to be a performance bond.
How much do bonds cost in IL?
Bond prices fluctuate based on the job size (that is, it’s based on the cost of the underlying contract). The cost of a bond is estimated through a couple of back-of-the-envelope calculations. In general, the cost is approximately three percent (3%) for jobs under $800,000 and then the percentage is lower as the contract amount increases. We work diligently to find the lowest premiums possible in the state of Illinois. Please call us today at (913) 225-8501. We’ll find you the very best rate possible for your maintenance bond or completion bond. Things that can affect this pricing are the perceived risk of the job, the financial position of the entity being bonded, plus other factors.
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These rates are for Merit clients, Standard rates are higher
How do I get a Bid Bond in Illinois?
We make it easy to get a contract bid bond. Just click here to get our Illinois Bid Bond Application. Fill it out and then email it and the Illinois bid specs/contract documents to [email protected] or fax to 855-433-4192.
You can also call us at 913-225-8501. We fully review all application for surety bid bonds and then submit it to the surety that we believe will provide the best surety bid bond for your job. We have a very high success rate in getting our clients bid bonds at the very best rates possible.
What is a Illinois Bid Bond?
A bid bond is a bond that provides assurance that you will accept the work if you win the contract. The bid fee (usually 5% or 10%) is a forfeiture that is paid when you win the bid, but then decide not to take the work.
Find a Bid Bond near Me
Typically, a bid bond and performance/payment bond are done together in the same contract by the surety. This way, the owner of the project is assured that the project can be completed pursuant to the terms of the contract and that it will not be liened by any contractor. The bond is performance security for the benefit of the owner.
Who Gets the Bond?
The general contractor is the corporation that obtains the bond. It is for the benefit of the owner (or in the case of government contract work, the governmental entity). However, it’s the general contractor that has to apply for the bond and be underwritten before the performance and payment bond is written by the surety. This is also known as bonding a business.
We provide bid bonds in each of the following counties:
See our Indiana Bid Bond page here.
More on Surety Bid Bonds https://swiftbonds.com/bid-bond/.
Getting to Know How to Find a Bid Bond
It is correct that Bid Bonds are very complicated, specifically if you do not have any idea how this works. Most folks are thinking about this as an insurance, but this is a kind of guarantee that the principal will do their work effectively. Although insurance providers usually offer a Surety Bid Bond, you can’t really call it insurance because it has a different function. Most folks would require you to get a Surety Bid Bond before they consider your services because it is a type of guarantee to them.
If you’d like to get a license bond, permit bond, commercial bond and more, you have to know how they work. We will provide some info on the importance of Bid Bonds and how they work.
What Is A Surety Bid Bond?
Bid Bonds are actually created to secure the public because they are a kind of guarantee that the obligation would be satisfied. You must get a license Surety Bid Bond to guarantee that your company will stick to the laws and you get a contract bond to guarantee that a public construction project will likely be completed.
These are the examples that are usually used to describe what Bid Bonds are and how they work. It will also benefit you since the consumers will put their trust in you as soon as they will be protected by bond.
There are thousands of bonds which exist right now and the type of bond that you need depends on your situation.
The Work Of A Surety Bid Bond
Bid Bonds are a three-party agreement between the principal, the obliged and the surety company. The obliged is actually the project owner and the principal is the employer or company that will perform the work. Construction businesses will be asked by the law to acquire Bid Bonds if they’re chosen for a public project. The government will require a construction company to secure a host of bonds before they’re permitted to work on a certain project. The bond will guarantee that the subcontractors and the other workers can be paid even if the contractor will default. The contractor will be covering the losses, but when they already reached their limit, the duty will fall to the surety company.
Applying For A Surety Bid Bond
Insurance businesses usually provide Bid Bonds, but there are some standalone surety businesses that specialize in these products. Surety businesses will always be licensed by a state Department of Insurance so ensure that you check first before you avail. It will not be simple to apply for a bond because the applications will need to go through checking before it is approved. The bond underwriters will first review you the financial history of the candidates, credit profile and other important aspects.
It means that there is a possibility that you’ll not be approved for a Surety Bid Bond, specifically if your credit history is bad.
How Much Do You Need To Spend?
You cannot really find an exact price for a Surety Bid Bond because its cost is always impacted by various factors like bond type, bond amount, where it will likely be issued, contractual risk, credit rating of the applicant and more. There are certainly thousands of different bonds available right now and the cost will depend upon the bond that you want to get. The amount of bound that you may avail may also be a big factor because you can select a $10,000 bond or a $25,000 bond or higher.
If you already have a credit score of 700 and above or very near this number, you may qualify for the standard bonding market and you only need to pay 1 to 4 percent of the Surety Bid Bond amount. This means that if you may get a $10,000 bond, you only need to pay $100 to $400 for the interest.
Is There A Chance To Be Refused?
There is a possibility that your license and permit bond request will likely be declined by the insurance providers and it’ll depend upon the background check that they carried out. Once they feel that giving you a bond is a huge risk, they won’t release a Surety Bid Bond for you.
Credit score is also a factor because in case you have a bad credit score, it would be very hard for you to get a Surety Bid Bond as the businesses consider you as a risk. In case you have a bad credit history and you were approved for the bond, you usually have to pay an interest rate of 10 to 20 percent.
There is a chance that your application will be refused so you have to look into the requirements before you apply.
If you genuinely wish to get your Surety Bid Bond, you need to be sure that you will understand the process so you won’t make a mistake. It won’t be easy to apply, but if your requirements are complete and you are eligible, you can obtain a Surety Bid Bond.