A failed contractor means a failed project and a financial disaster. With every contractor failure looms the potential for abandoned and delayed projects, increased financing costs, capital calls, lender issues, lost buyers or tenants, litigation, clouds on title and foreclosure. Surety bonds reduce the risk of these common problems.
Public construction projects almost always require surety bonds to protect the government if the contractor is unable to complete the project or absconds with the funds. Indeed, bonding has been required by the U.S. Government on federal public works projects since the late 1890’s. Currently, there is a trend toward private development projects requiring these bonds as well. One reason is because obtaining financing without having a majority of the project bonded is becoming more and more difficult. Moreover, private project owners have become increasingly interested in taking advantage of the same protections as public owners historically have had for the benefit of their projects, stakeholders, investors, lenders, and principals.
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