A simple guide for contractors and business owners who need a bond for licensing, contracts, or compliance.
If you’ve been told you need a bond for a job, a license, or a contract requirement, you’re not alone. Surety bonds are a common requirement for contractors, business owners, and professionals—especially when you’re working with public entities, property managers, or clients who want extra assurance that the work will be completed properly.
This guide breaks down what bonds are, the most common bond types, and how to get the right bond quickly.
What is a surety bond?
A surety bond is a three-party agreement that provides a financial guarantee that a business or individual will meet an obligation.
There are three parties involved:
- Principal: the person or business required to get the bond
- Obligee: the party requiring the bond (state agency, municipality, client, etc.)
- Surety: the company that backs the bond and guarantees the obligation
If the principal fails to meet the bonded obligation, a claim may be filed. The surety may pay valid claims—then the principal is typically responsible for reimbursing the surety (because bonds are a guarantee, not traditional insurance).
Why do clients and agencies require bonds?
Bonds exist to protect the party requiring them. They help ensure:
- Work is completed according to contract requirements
- Laws and regulations are followed
- Funds and trust are protected (especially with public projects)
- There’s financial recourse if obligations aren’t met
In plain terms: bonds create accountability and reduce risk for the client or government entity.
Common types of bonds
Depending on your industry, you may need one (or several) of the following:
- License & Permit Bonds: Required by state/local agencies to obtain or maintain a license. Examples include Contractor license bonds, Auto dealer bonds, Notary bonds or Freight broker bonds
- Contract Bonds: Often required for construction or service contracts, especially public work Bid Bonds: guarantee you’ll honor your bid and sign the contract if awarded, Performance Bonds: guarantee the project will be completed per the contract and Payment Bonds: guarantee subcontractors/suppliers will be paid
- Commercial Bonds: Support ongoing business obligations: Fidelity/Employee Dishonesty Bonds (often requested by clients), Janitorial/Service Bonds (common for businesses working in homes/offices) or ERISA Bonds (required for many employee benefit plans)
Get your bond online
If you need a bond now (or want to see options quickly), you can start here:
https://fc33671.propeller.insure/axelerator-public/
