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Completion Surety Bond
What is a Completion Bond?
A Completion Bond is a surety bond that guarantees a project will be completed on-time, within budget, and free of liens. Completion surety bonds are primarily used in the construction industry, but are also used in the film production and video game production industries. Therefore, completion bonds are also referred to as construction bonds, performance bonds, film production bonds, and video game production bonds.
A Completion Bond is slightly different than a traditional contract bond or performance bond. Contract and performance bonds guarantee the successful completion of a contract, whereas a completion bond guarantees the successful completion of an entire project. A project that requires a completion bond could also require separate contract bonds to guarantee successful completion of certain parts of that project.
Completion Surety Bonds are individually underwritten so the cost can vary and depends on the size and scope of the project as well as the contractor’s size and experience. Typically, well qualified applicants are charged as low as 1-3% of the total bond amount.
Due to the associated risk from the perspective of the bonding company, Completion Bonds can be very carefully underwritten. Part of the cost of this bond will be the time and effort needed to provide the documentation and information the bonding company will need. Some of this information will include corporate financials, personal financials, credit reports, industry experience, project details, and sources of funding. The larger the project, the more details and information that will be required. Here is a comprehensive list of items needed to establish a full surety relationship.
Developers, contractors, and producers oftentimes need to secure loans in order to finance a project. So, they turn to banks and other investors for these funds. Banks and investors will then require a completion bond in order to guarantee the project they are financing will be completed. That way they can guarantee at least some sort of return on their investment.
In most cases, banks and financial institutions require completion bonds when lending money for a project. Although, governments and private project owners can require completion bonds as well. In a case where a bank lends a developer money for a project and requires a bond, the Obligee would be the bank and the developer would be the Principal on the bond.
Contact The ProSure Group! As surety bond experts in business since 1993, The ProSure Group has issued hundreds of Completion Bonds and has partnerships with more than 30 different surety companies. This ensures that we get you the best, most competitive pricing and terms available in the marketplace. You just need to complete our simple application and one of our specialists will quickly contact you.
