Payment bond

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For payment bonds on U.S. Government construction contracts, see Miller Act.
For payment bonds on state government construction contracts, see Little Miller Act.

A payment bond is a surety bond posted by a contractor to guarantee that his subcontractors and material suppliers on the project will be paid.[1] They are required in contracts over $30,000 with the Federal Government and must be 100% of the contract value. [2] They are often required in conjunction with performance bonds. [3]

There is no high-risk market available for performance and payment bonds. Up to the turn of the century bonding companies were approving everyone, even those who did not qualify for the bond type or size. During this time record loses occurred throughout the industry as many companies closed their doors. Since this time the industry has stabilized as bonding companies have set up more rigid guidelines for approval.[4]

References[edit]

  1. ^ "Business Dictionary". Retrieved August 15, 2010. 
  2. ^ "Federal Acquisition Regulation Site". Retrieved August 15, 2010. 
  3. ^ "Payment Bonds". Lance Surety Bond Associates, Inc. Retrieved 2014-07-28. 
  4. ^ "Payment Bonds". Bryant Surety Bonds, Inc. Retrieved 2014-07-22.