Payment Bonds – Guarantees Payment to Suppliers & Contractors

Bad Credit Approved • Same Day Quotes • Contracts up to $ 10M

✓ Guarantees payment to all project workers
✓ Usually bundled with performance bonds
✓ Bad credit programs available

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What is a Payment Bond?

A payment bond guarantees that all subcontractors, suppliers, and laborers involved in your construction project will receive payment for their work, services, and materials.

Who Benefits from Payment Bonds?

  • 👤

    Subcontractors – Guaranteed payment for their work

  • 👤

    Material Suppliers – Protected against non-payment

  • 👤

    Laborers – Ensures wages are paid

  • 👤

    Project Owners – Prevents mechanic’s liens on property

  • 👤

    General Contractors – Demonstrates financial stability

When Are Payment Bonds Required?

🏢

Federal Projects (Miller Act)

  • Required for all federal construction contracts over $150,000
  • Must be issued alongside performance bond
  • Protects all tiers of contractors and suppliers
🏢

State & Local Projects (Little Miller Acts)

  • Most states require payment bonds on public projects
  • Threshold amounts vary by state
  • Check your state’s specific requirements
🏢

Private Projects

  • Not legally required but increasingly common
  • Often required by project owners and lenders

Payment Bond vs Performance Bond

Payment and performance bonds:

🛡

Performance Bond

  • Guarantees project will be completed
  • Protects the project owner
  • Covers completion costs if contractor defaults
💰

Payment Bond

  • Guarantees contractors/suppliers get paid

Together: They provide complete protection for all parties involved in a construction project.

Learn About Performance Bonds

Pricing Breakdown

How Much Do Payment Bonds Cost?

Payment bond costs are typically bundled with performance bond premiums. When issued together, expect the combined premium to be 3% of the contract price.

Combined Performance & Payment Bond Pricing:

Standard Rate = 3%

  • Credit Score 600+

Bad Credit (Below 600):

  • Rate: 5% – 15%
  • Collateral may be required

Factors Affecting Cost:

  • Credit score
  • Financial strength
  • Industry experience
  • Project type and size
  • Claims history

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Payment Bonds with Bad Credit

BondsExpress specializes in payment bonds for contractors with bad credit.

Approval based on:

✓ Contractor experience
✓ Project history and success rate
✓ Collateral options available

Available For:

✓ Credit scores below 650
✓ Past bankruptcies
✓ Past Tax liens or judgments
✓ Limited bonding history
✓ New contractors

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FAQ – Payment Bonds

Who can make a claim on a payment bond?
Contractors, material suppliers, equipment lessors, and laborers who have not been paid for their work or materials on a bonded project.
Do payment bonds prevent mechanic’s liens?
Yes. On public projects, payment bonds serve as a substitute for mechanic’s lien rights. Subcontractors cannot file liens but can make claims against the payment bond instead.
Are payment and performance bonds always required together?
On federal and most state public projects, yes. They must be issued together. On private projects, requirements vary.