How to Get a Surety Bond: Types, Costs, and the Steps to File One

A surety bond is a three-party guarantee among the principal (the business or person who must perform or pay), the obligee (the agency, court, project owner or other party the bond protects) and the surety (the company that stands behind the principal's obligation), according to the Surety and Fidelity Association of America (opens in a new tab) (SFAA). To get one, first obtain the obligee's written requirement, including the bond type, amount, legal names, form, filing location and deadline. Then apply through a licensed surety producer. The surety reviews your credit, financial strength, capacity, character, experience and contract information. If you are approved, you pay the premium, sign the bond and any indemnity documents, and file the executed bond with the obligee. An SBA guarantee (opens in a new tab) can help with eligible contract bonds, but it does not guarantee approval and does not cover commercial bonds.

What should you do first?

Get the requirement in writing from the obligee, whether that is a licensing board, a court, a lender or a project owner. The bond amount is set by a statute, regulation, licensing agency, court, obligee or contract, so you do not choose it. Ask for:

• The bond type and the amount (the penal sum)
• The obligee's exact legal name and address, and your exact legal name as registered
• The required bond form, since some agencies prescribe their own
• Where the bond is filed, and the deadline
• Signature and notarization rules
• Any cancellation terms

Name-matching and form rules are strict. Oregon contractors must use the state's own bond form and the contractor's full legal name, and submit the bond with the license application. The bond is not valid until the Construction Contractors Board (opens in a new tab) puts it into effect. A bond that is late, wrongly named or on the wrong form can leave you short of the deadline, so check the paperwork against the requirement before you apply.

Which type of surety bond is required?

Surety bonds fall into contract and commercial categories, according to SFAA. The type you need depends on the business activity, state, municipality, court, lender, contract or project owner.

• License and permit bonds are required by a state law, municipal ordinance, regulation or government agency as a condition of operating a business or receiving a permit. A small business usually meets one of these first.
• Bid bonds support a bidder's commitment in a construction procurement.
• Performance bonds guarantee completion of the contract according to its terms.
• Payment bonds guarantee payment to subcontractors, suppliers and workers under the bond's terms.
• Court bonds include judicial bonds and fiduciary bonds. A fiduciary bond secures the faithful performance of an administrator, executor, guardian, trustee, receiver or similar fiduciary.
• Maintenance, supply and ancillary bonds cover obligations outside the main performance or payment obligation.

Fidelity bonds are a separate category. They address employee dishonesty and sit apart from the core surety categories.

Is a surety bond insurance?

The surety is an insurance company, but the bond guarantees the principal's obligation to the obligee. It is not ordinary insurance for the principal. The bond protects the obligee if the principal fails to perform or pay under the bond, contract, statute or regulation. The principal remains primarily responsible for the obligation, and the principal usually pays the premium.

A surety bond also does not stand in for general liability insurance. If you are sorting out which policies a business needs alongside a bond, a licensed agency can walk through the difference.

Where do you apply?

Apply through a licensed surety producer. A producer is generally an insurance producer authorized under the state's licensing system to solicit, negotiate or sell specified lines of insurance. Check a producer's license with your state insurance department (opens in a new tab). In Connecticut, for example, producers apply for that license through the National Insurance Producer Registry, per the Insurance Department's producer page (opens in a new tab).

Confirm three things before you pay anything:

• The producer is authorized for the relevant line and state.
• The surety company is authorized to write the bond in that state.
• The obligee does not require a Treasury-listed surety. For federal bonds, check Treasury Circular 570 (opens in a new tab). A surety must be licensed in the state or area where it provides a federal bond, and the 2026 revision took effect August 1, 2026.

For an eligible SBA contract bond, go through an SBA-authorized surety agency.

What documents does the surety ask for?

Expect a surety application, your business formation and registration information, and the obligee's requirement. For contract bonds, the surety asks for more. Underwriting looks at these inputs, according to SFAA's Contract Surety Bonds publication (opens in a new tab) and Surety Manual (opens in a new tab):

• Annual and interim financial statements, and statements for three to five years
• Cash flow, net worth and working capital
• Credit history and bank relationships
• A work-in-progress schedule
• Completed projects and profitability
• Equipment and personnel
• Current and future work
• Management and continuity plans
• Geographic work areas
• Reputation with owners, subcontractors, suppliers and lenders

An indemnity agreement is part of many bond packages, and a power of attorney is attached to some bonds. Ask the producer which of these apply to your bond.

How does underwriting work?

The surety decides whether to issue the bond after reviewing your credit, capacity, character, financial condition, experience, contract terms and business controls. Credit is one factor among several. For contract bonds, financial statements and work in progress carry a lot of weight because they show whether you can finish the work you already have and take on more.

Underwriting does not produce a universal yes or no. Ask the producer what the surety will want to see, how long the review takes for your bond, and whether it can require collateral.

How much does a surety bond cost?

The bond amount and the premium are different numbers. The amount (the penal sum) is the obligee's requirement, and it caps what the surety can be asked to pay on the bond. The premium is what you pay the surety, and it is generally a percentage of the bond or contract amount, depending on the bond type, the size and type of project, and your bonding capacity.

One dated benchmark exists for construction. Performance-bond premiums typically run 0.5% to 2% of the contract amount in SFAA's construction context, per its Contract Surety Bonds publication (opens in a new tab) (accessed September 30, 2026). Bid bonds often carry no charge, and a payment bond can be issued without an additional charge when it comes with a performance bond. That range is not a quote. License, permit, court and other commercial bonds can follow different rating rules, minimum premiums, renewal terms or state-approved rates.

So, the honest answer to "what will mine cost?" is a question for a licensed producer: what is the premium for this bond amount, is it annual, one-time or renewable, and what does it depend on?

Can the SBA help?

For eligible contract bonds, yes. The SBA Surety Bond Guarantee program covers bid, payment, performance and ancillary bonds and does not cover commercial bonds, according to the SBA (opens in a new tab). Eligibility, as of September 30, 2026:

• The business qualifies as a small business under SBA size standards.
• The contract is up to $9 million for a non-federal contract, or up to $14 million for a federal contract.
• The business meets the surety company's credit, capacity and character requirements.

Performance and payment bond guarantees carry an SBA fee of 0.6% of the contract price, and there is no SBA guarantee fee for bid bond guarantees. That fee is separate from the surety's premium. On the SBA's partner page (opens in a new tab), the guarantee can be up to 90% for bonds on contracts up to $100,000 and for certain eligible categories (economically disadvantaged, HUBZone, 8(a) and veteran-owned businesses). It can be 80% for other contracts up to $9 million, or up to $14 million when a federal contracting officer certifies the guarantee is necessary.

You apply through an SBA-authorized surety agency, which submits the SBA forms and bond documents. The guarantee supports the surety. It does not promise that you will be approved.

How do you sign and file the bond?

After approval, review the proposed bond and any indemnity agreement before you sign. Then pay the premium, sign, and arrange notarization if the obligee requires it. New York shows how specific this gets: under its Article 21-B instructions (opens in a new tab), the applicant and the surety sign the bond and acknowledge it before a notary.

File the executed bond with the obligee, licensing agency, court or project owner, in the form it prescribes. Then confirm that the obligee accepted the bond and put it into effect. If it was rejected, ask what must change, and whether the bond can be amended for a name or contract change.

How much do bond requirements vary by state?

Bond rules follow the business activity and the state, and each state's licensing agencies and laws set them. The examples below are sector-specific and do not set a universal requirement for contractors, tradespeople, notaries or small businesses in any state.

Connecticut shows how two sectors in one state differ: electronic issuance licensees need three separate bonds totaling $45,000, according to the Connecticut DMV (opens in a new tab), and third-party administrators need a bond of not less than $500,000, per the Connecticut Insurance Department (opens in a new tab).

Oregon contractors carry bonds set by license endorsement. Examples from the Construction Contractors Board (opens in a new tab) are $25,000 for a residential general contractor and $80,000 for a commercial general contractor Level 1.

New York Article 21-B certification bonds range from $50,000 for a manufacturer and $25,000 for a retailer to $10,000 for an installer and $5,000 for a mechanic, depending on the certification category, per the New York Department of State (opens in a new tab).

The figures above were current as of September 30, 2026, and each agency can change them. Get the exact requirement from your own licensing agency, municipality, court, lender or contract.

What happens if a claim is made?

The obligee submits a claim or demand under the bond's terms. The surety evaluates the alleged default, the bond language, the principal's obligation, available defenses, and the notice and proof requirements. If the bond responds, the surety can pay the obligee or otherwise resolve the obligation, and the bond's penal sum limits its liability.

The principal still owes the underlying obligation. After the surety makes good on a default, the surety takes over the obligee's rights against the principal, according to the SFAA Surety Manual (opens in a new tab), so the surety can seek recovery from the principal under the bond and the indemnity agreement. A consumer-facing example from the Oregon board: if it orders a contractor to pay and the contractor does not, the bonding company can pay the amount owed, up to the bond amount.

Checklist before you file

• Written requirement from the obligee
• Bond type and penal sum
• Obligee's exact legal name and address
• Your exact legal name
• Required bond form, filing destination and deadline
• Formation and registration information
• Financial statements and work-in-progress schedule
• Current and completed project information
• Credit and banking information
• Organizational chart and management details
• Completed surety application
• Indemnity agreement and power of attorney, if required
• Principal and surety signatures, and notarization where required
• Premium payment
• Confirmation that the obligee accepted and activated the bond

Frequently asked questions

Is it difficult to get a surety bond?

It depends on the bond and on the business. A license bond and a large construction bond are reviewed differently, and the surety looks at credit, capacity and character for contract bonds. Ask a licensed producer what the surety will want to see for your bond, and whether an SBA guarantee is available if it is an eligible contract bond.

How much does a $10,000 or a $1,000,000 surety bond cost?

The premium is generally a percentage of the bond amount, and the percentage depends on the bond type and on underwriting. The 0.5% to 2% benchmark applies to performance bonds in the construction context, not to every bond. Ask the producer for the premium on your exact bond and whether it renews.

How do you qualify for a surety bond?

Credit, financial statements, work history, experience and, for contract bonds, current work in progress all count. For an SBA-backed bond you also need to meet the SBA's small-business standards and contract limits.

Who is protected by the bond?

The obligee. You remain responsible for the obligation, and the surety can look to you for repayment after paying a claim.

Your next step

Take the obligee's written requirement and the checklist to a licensed agency that handles bonds, and confirm the producer's license with your state insurance department (opens in a new tab) first. Ask about the premium, the documents the surety wants, the timeline against your deadline, and whether an indemnity agreement applies. You can search agencies by state in the Riskado agency directory.