How Much Does a Surety Bond Cost in 2024


Whether it’s your first time getting a surety bond or you’re simply getting new bonds as the business grows, one thing’s for sure—you want to know how much does a surety bond cost. Don’t worry, we got you covered. In this guide, we will explain everything you need to know regarding the bond price and the factors that impact it.

What Is a Surety Bond?

Surety bonds are an integral part of every business, but few understand what this actually means. While some think that a surety bond is some kind of insurance, others think of it as some kind of loan. While neither are that far off from what a surety bond actually is, the idea behind a surety bond is slightly more complex.

In simple terms, a surety bond meaning can be defined as a binding contract between three parties: the obligee (the party who requires the bond), the principal (the person or company that purchases the bond), and the surety (a third-party guaranteeing payment).

The actual purpose of a surety bond is to protect the obligee from loss in the event that the principal fails to meet their obligations. The surety guarantees payment, so the obligee is not left out of pocket if the principal doesn’t pay.

Did You Know: The SBA guarantees surety bonds to some surety companies, allowing small businesses to buy a surety bond to get in the market.

Types of Surety Bonds

Even though surety bonds come in various types, the four most prominent categories of surety bonds include contract surety bonds, commercial surety bonds, court surety bonds, and fidelity surety bonds. Even though we explained the basic surety bond definition, each category is different in its core, so it would be best to explain them one by one.

Contract Surety Bond

Since surety bonds provide some kind of financial security, a contract surety bond guarantees that the contractor will stand by the specifications in the construction contract. This type of surety bond can be issued by The Small Business Administration (SBA). If the contractor fails to come through, the surety company is bound to reimburse any expenses to the project owner or find another contractor.

Also, a contract bond or surety bond for construction assures the project owner that the contractor in charge is qualified to perform the work they have agreed upon and will complete their obligations to pay any additional expenses such as subcontractors and material suppliers. A contractor surety bond cost can range from 0.5% to 3% of the contract price.

Contract surety bonds are subdivided into four types:

  • Bid Bond: a bid bond guarantees that the contractor from the bid won’t back down from it, and that he will follow the specifications from in the bid.
  • Payment Surety Bonds: bonds that guarantee that a contractor will pay subcontractors and suppliers in full, as the contract states.
  • Maintenance Bonds a.k.a Warranty Bonds: ensure that the project owner is protected by any losses that can happen due to faulty materials on site.
  • Performance Bonds: performance bonding comes into effect whenever a contractor cannot complete the project. The performance surety bond cost ranges from 0.5% to 4% of the bond amount as a one-time fee. In some cases, a performance surety bond has a fixed rate, but it depends on the contract value.

Commercial Surety Bond

A commercial surety bond is used to protect public interests, and it’s mostly required by government agencies or entities. Typically licensed businesses use this type of bond in order to assure the public that they follow through with all the regulations and codes in their area. Every new business that requires some kind of permit to continue working under the law, such as liquor stores, notaries, etc., will need to get a commercial bond.

Fidelity Surety Bond

Along with a surety bond for construction, a fidelity surety bond is one of the most frequently used surety bonds. Companies that deal with a lot of money and expensive items usually use fidelity surety bonds. It can happen, especially in a company with a lot of employees, for an employee to misbehave and commit fraudulent actions, putting the company at risk of being exposed to potential legal or financial penalties. That’s why companies that deal with a lot of money and valuable items use fidelity surety bonds. These bonds protect a company from employee dishonesty and theft that might occur in the workplace. Because it might happen for the employee who handles cash to abuse the position.

Court Surety Bond

There is a possibility that an attorney requests a surety bond called a court surety bond to protect himself during court cases. This bond type protects legal administrators from the uncertainty of court hearings.

Did You Know: Usually, bonds are paid in full and the renewal time is after a year of purchasing the surety bond, even though, in some cases, the renewal time is after two to three years.

How Does a Surety Bond Work?

The main idea behind the surety bond is to ensure that participants will comply with the law imposed, but how exactly does it work? For this goal to be achieved, the principal needs to obtain a surety bond that will serve as a guarantee to the obligee in case there is an unexpected financial scam on their behalf. The principal applies for a surety in some of the authorized surety companies, such as the Small Business Administration.

Depending on many factors, the company grants them a bond that protects the obligee from the risk of a financial collapse. If, in any case, the principal fails to stand by the terms imposed in the contract, the obligee is free to make a claim on the surety bond to recover any losses incurred.

A possible drawback of getting surety bonds is the surety bond cost which can be quite steep depending on the bond type. However, it is a valuable thing to have, as it protects even those who are not directly involved in the contract, not just the obligee. For instance, a construction surety bond protects the suppliers and subcontractors since by guaranteeing that they will be paid no matter the circumstances.

Did You Know: There is an SBA Surety Bond Guarantee Program that guarantees some contract bonds (bid, performance, payment, and ancillary) for a fee of only 0.60% of the contract value.

How Much Does a Surety Bond Cost?

Usually, the cost of a surety bond ranges between 1% to 15% of the bond amount. For instance, when getting a $10,000 surety bond policy, you’ll be charged from $100 to $1,500. The bond rate percentage indicates how the surety company perceives you. If you are offered a higher surety bond rate when requesting the company to vouch for you, it means that they have doubts about you paying them back.

As a rule of thumb, the bigger the risk, the higher the cost of a surety bond. The risk level of a bond depends on the bond type and the applicant’s financial history. For instance, if you request a bond type that carries higher risk and on top of that you have bad credit, the bond cost could be as high as 20% of the bond amount.

How do you pay for the surety bond? Usually, they are paid with a full payment upfront, most commonly through credit cards or checks. There are even credit cards for bad credit businesses, so anyone can obtain a surety bond.

Did You Know: Many confuse the bond amount with the bond cost. To clear things up—the bond amount is a small percentage of the total bond cost.

What Factors Impact the Price of a Bond?

A handful of factors help companies in deciding the surety bond cost, so let’s take a closer look at each of those factors.

  • Type of Surety Bond Needed

The key factor which dictates the price of a surety bond is the type of bond you need, as almost all surety bond types are differently priced. For example, the average cost of a court surety bond is 0.5% to 1% of the bond amount.

  • Bond Coverage Amount Required

The bond coverage amount required is the amount of money that the surety must be willing to pay if the principal fails to meet their obligations. While the average cost of a surety bond ranges from 1% to 15%, the bond coverage amount can greatly impact the price of a surety bond because the higher the bond coverage amount, the higher the cost of the bond.

  • Your Credit History

Since surety companies vouch for you, they will certainly look into your credit history before issuing a bond. If you have a great credit history, the possibility of getting a smaller percentage on your surety bond is huge.

  • Regulatory Authority Requiring the Bond

Every regulatory authority has different policies when dealing with surety bonds, thus the bond costs will be different.

  • The Bond Provider You Work With

Choosing the perfect bond provider for the surety bond you want to get is very important because every bond provider offers different bond prices.

  • The State You Will Be Operating In

Every state has different policies for issuing surety bonds because different government agencies have set different bond regulations, so the bond price varies from jurisdiction to jurisdiction.

  • Years of Experience In the Industry

If you are experienced in the industry in which you are willing to get a surety bond, that could impact the price. The more experience you have, the more likely it is that you have the right skills and necessary knowledge to avoid claims against your bond. For example, if you worked in the construction industry for a few years, your performance surety bond cost will be better than expected.

  • Claim History for Previous Bonds

Lastly, if you have a claim history for previous bonds, there’s a great possibility for the price of the bond to go up.

Can You Get the Surety Bond If You Have Bad Credit?

Contrary to popular belief that you cannot get a surety bond if you have bad credit, doing so is quite possible, much like getting a loan with bad credit. However, this wasn’t the case until a few years back when many surety companies started offering bonds even to those with bad credit. The only downside to this practice is that surety bonds obtained with bad credit cost a great deal more than those for individuals with good credit scores.

How to Get a Surety Bond?

Getting a surety bond is a relatively easy process that you can complete in just a few steps. First, you need to decide what type of bond you need while making sure to check with your state to see what bonds your state offers. While still learning how to get a surety bond, remember that for obtaining any bond surety companies require more or less the same information (business name and address, credit report, business, and personal financials, etc.). Apply for the bond you’ve decided on, purchase it, and lastly, check with the obligee requiring the bond to see if everything is okay.

Wrap Up

The bonding process can seem confusing at first, but once you grasp the idea of what surety bonds are, how they work, and especially how much they cost, you’ll become an expert in that area. Keep in mind that surety bonds are required in every state, so try your best to understand their cost.


How long does it take to get a surety bond?

In most cases, authorized surety companies can issue a bond within 24 hours from the application time. For riskier bonds it can take a bit longer than that, but still no more than a few days.

What is the purpose of a surety bond?

The surety bond serves as a guarantee that the principal (the one who needs the bond) will comply with the terms in the contract. Also, it protects the other party from potential financial scams on behalf of the principal.

What does a surety bond cover?

A surety bond covers the financial aspect of a contract, making sure that the parties involved act accordingly. For that reason, how much does a surety bond cost is a question posed by many who want to get one and be protected from financial disputes.


I learned a lot about finance after working for a digital marketing company specializing in investing and trading stocks, forex, etc. After that, I got exposed to other verticals such as wealth management and personal finance, which further improved my understanding of the financial world.

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