Question 1

What is a contractor bond?

Accepted Answer

A contractor bond is a guarantee that you'll complete your work as promised and pay your suppliers/subcontractors. It protects your clients and the public. Most contractors need multiple bonds: license bond (required by CSLB), bid bond, performance bond, and payment bond.

Question 2

Do I need a license bond?

Accepted Answer

Yes. California law (Business & Professions Code §7071) requires all CSLB-licensed contractors to have a $15,000 license bond. This is a minimum requirement. Some contractors get higher bonds ($25,000–$50,000) for credibility.

Question 3

What's the difference between bid, performance, and payment bonds?

Accepted Answer

Bid bond: Guarantees your bid price is accurate. Performance bond: Guarantees you'll complete the project to specifications. Payment bond: Guarantees you'll pay subcontractors and suppliers. Most large projects require all three.

Question 4

How much do bonds cost?

Accepted Answer

Bond costs depend on: (1) Bond type, (2) Bond amount, (3) Your credit score, (4) Years in business, (5) Claims history. Typical costs: license bond $500–$2,000/year, bid/performance bond 1–3% of bond amount, payment bond 1–2% of bond amount.

Question 5

Does my credit score affect bond cost?

Accepted Answer

Yes, significantly. Contractors with credit scores 750+ get the best rates. Scores 650–749 pay 20–30% more. Scores below 650 pay 40–60% more or may be denied. Building business credit improves your bond rates.

Question 6

How long does it take to get a bond?

Accepted Answer

License bonds typically take 1–3 business days. Project bonds (bid, performance, payment) can take 24–48 hours for established contractors. New contractors may take 5–10 business days. Having good credit and financial records speeds up approval.

Question 7

What if I have a claim on my bond?

Accepted Answer

If a claim is filed against your bond, the bonding company investigates. If valid, they pay the claim (up to the bond amount). You're responsible for reimbursing the bonding company. This is why maintaining good business practices is critical.

Question 8

Can I get a bond with bad credit?

Accepted Answer

Yes, but it's more difficult and expensive. You may need: (1) A co-signer with good credit, (2) A larger deposit, (3) Personal guarantees, (4) Proof of business income. Some bonding companies specialize in high-risk contractors.

Question 9

Do I need a new bond every year?

Accepted Answer

License bonds typically renew annually. Project bonds (bid, performance, payment) are one-time per project. After project completion, the bond is released. You'll need a new bond for the next project.

Question 10

How do I get a bond?

Accepted Answer

Contact a bonding company or insurance broker. You'll need: (1) CSLB license, (2) Business license, (3) Tax ID, (4) Financial statements, (5) Personal credit report. Most bonding companies can issue bonds online in 24–48 hours.

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