Surety Bonds Made Simple: What Contractors Really Need to Know

Every contractor has seen the phrase “licensed and bonded” but few actually understand what it means.

In this episode of Construction Champions, host Ron Nussbaum sits down with Gary Eastman, attorney and founder of Swiftbonds.com, to break down surety bonds in plain English.

If you’ve ever asked, “Do I need a bond?” or “Why are bonds so expensive?”, this conversation is your crash course on one of construction’s most misunderstood financial tools.

What Exactly Is a Surety Bond?

A surety bond is not insurance, it’s a three-party agreement between:

The Obligee (the owner or client)
The Principal (the contractor)
The Surety (the company guaranteeing the contractor’s performance)

In short, a surety bond guarantees that you’ll do the work you said you’d do, and if you don’t, the surety ensures the client doesn’t get left hanging.

There are two main types of construction bonds:

Performance Bonds – guarantee that the contractor completes the project per contract.
Payment Bonds – guarantee that all subcontractors and suppliers get paid.

Unlike insurance, bonds protect the client, not the contractor. But they also build trust and open the door to bigger, more profitable work.

How Much Do Bonds Cost and Who Pays?

Most contractors are surprised to learn that bonds are surprisingly affordable.

According to Gary Eastman, most standard performance and payment bonds cost between 0.5% and 3% of the total project value, depending on credit, experience, and financials.

The contractor typically pays for the bond, but it’s factored into the project bid, meaning it’s part of doing business at a higher level.

Gary explains it this way:

“You’re not buying protection for yourself, you’re buying credibility for your client.”

Why Bonds Are Moving Beyond Government Work

For years, bonding was only common in federal and public works projects, largely because of the Miller Act, which requires bonds on federal contracts over $100,000.

But now, things are changing.

Private developers, GCs, and even homeowners are starting to require bonds on private and residential projects. It’s a sign that trust and accountability are becoming non-negotiable in the modern construction market.

“We’re seeing more private owners demand bonds because they want the same protection the government has had for decades,” says Eastman.

That trend is only accelerating, especially as financing partners and insurers push for more secure, transparent contracting practices.

How to Get Approved for Your First Bond

Getting bonded for the first time can seem intimidating, but it’s simpler than most think.

Here’s Gary’s step-by-step breakdown:

Work with a reputable surety agent (like Swiftbonds).
Prepare your financials — balance sheet, work history, and WIP schedule.
Start small — build capacity over time.
Be honest and transparent — surety companies value truth over perfection.

Your bonding capacity, the amount you can be bonded for, grows as your track record and financial stability improve.

Common Myths About Bonding

Gary busts some of the biggest myths holding contractors back:

“Bonding is only for big companies.”→ Truth: Small and mid-sized contractors can qualify and bonding helps them grow.
“Bonds are too expensive.”→ Truth: The cost is minimal compared to the jobs they unlock.
“Bonding means more paperwork.”→ Truth: Once you’re set up, renewals and applications are straightforward.
“Private jobs don’t require bonds.”→ Truth: Increasingly, they do and those jobs often pay better.

Why Every Contractor Should Understand Surety Bonds

Surety bonds aren’t just about compliance, they’re about credibility, growth, and opportunity.

When you’re bonded, clients see you as trustworthy and financially stable. It’s a signal that you play at a professional level, that your company stands behind its word, and that you’re prepared to handle bigger projects.

As Gary Eastman puts it:

“Being bonded doesn’t just protect your client, it separates the pros from the amateurs.”

About Gary Eastman

Name: Gary Eastman
Company: Swiftbonds / Access Surety
Title: Attorney & Surety Expert
Website: Swiftbonds.com
LinkedIn: https://www.linkedin.com/in/gary-eastman-6284323/
Specialty: Contract, license, permit, and court bonds for the construction industry

How BuilderComs Fits In

As contractors take on larger bonded projects, communication becomes mission-critical.

That’s where BuilderComs helps.

With project-based messaging, automated updates, and client portals that keep everyone in sync, BuilderComs ensures your team, client, and subs always stay aligned, the same trust and accountability that bonding promotes, built right into your daily workflow.

Learn more at www.buildercoms.com.