Bid Bond Cost: Most Contractors Pay Nothing
How much does it cost to get a bid bond? Here is something many contractors do not realize: some carriers provide bid bonds at little or no cost for qualified accounts (the carrier decides), because their revenue comes from the performance and payment bonds that follow. Use our bid bond calculator to run your own numbers.
Get Your Bid Bond
Often free with P&P bonds
- Amount: 20% of your bid price on federal contracts (a $400,000 bond on a $2 million bid). The bond amount is coverage, not what you pay.
- Typical cost (estimate): often free with performance and payment bonds; otherwise a flat fee of $50-$250 per bond is common. The surety sets the final price.
- Timing: We submit complete applications to the carrier promptly; most quotes within one business day.
Why Are Bid Bonds Often Low-Cost?
The surety business model explains everything. A bid bond guarantees that if you win the contract, you will sign it and provide performance and payment bonds. Those P&P bonds carry premiums of 1-3% of the contract value - on a $1 million project, that is $10,000-$30,000 in premium revenue for the surety. Our guide to performance bond cost covers the performance side. For the payment side, see our state-by-state guide to labor and material bond cost.
Charging $100 for the bid bond and risking the contractor going to a competitor for the P&P bonds often makes little business sense, so some carriers provide bid bonds at little or no cost for qualified accounts. The carrier decides. Think of it like a bank waiving the fee on a checking account because they make money on your mortgage. For the bigger picture on how license bonds and project bonds fit together, see our guide to contractor bonds. Once you win the work, see how much construction bonds cost.
The Math Makes It Obvious
On a $2 million federal project: the bid bond amount is $400,000 (20% of bid), but the bid bond cost to you may be little or nothing if your carrier chooses. When you win, the performance and payment bonds on that same project generate $20,000-$60,000 in premium for the surety. That is why some carriers charge little or nothing for the bid bond. For how that premium is set, see our guide to performance and payment bond cost.
When Bid Bonds Carry a Fee
Not every contractor gets low- or no-cost bid bonds. Here are the situations where you will pay a fee:
No Surety Relationship
If you do not have an established bonding line with a surety company, they have little incentive to waive the bid bond fee. You are essentially a one-time customer. Expect a flat fee of $50-$250.
High-Risk Applicant
Poor credit, limited experience, or financial weakness means the surety sees more risk. They may charge a fee to compensate for the underwriting effort, especially if they are unsure about your ability to get P&P bonds later.
One-Off Bid Bond
If you only need a bid bond without plans for performance and payment bonds (rare, but it happens), the surety has no downstream revenue to justify free issuance. You will pay the flat fee.
Exceeds Bonding Capacity
If the project exceeds your current bonding capacity, the surety may not be able to commit to the P&P bonds. Without that commitment, the bid bond is likely to carry a fee - and may not be available at all.
Bid Bond Amounts: How Much Coverage You Need
The bond amount (coverage) is different from your cost. Here is what project owners require.
| Project Type | Bond Amount | Authority | Your Cost |
|---|---|---|---|
| Federal ($150K+) | 20% of bid amount | FAR 28.101 | Usually $0 |
| State Public Works | 5-10% of bid | Little Miller Acts | Usually $0 |
| Municipal / Local | 5-10% of bid | Local ordinances | Usually $0 |
| Private Projects | 5-20% (varies) | Contract terms | $0-$250 |
Example: You are bidding $2,000,000 on a federal highway project. The bid bond amount is $400,000 (20% of $2M per FAR 28.101-2). Your cost for this bond? $0 if you have a surety relationship. The surety earns its money from the performance bond ($20,000-$60,000) and payment bond that follow. For typical premiums by credit score and contract size, see our guide to performance surety bond cost.
SBA Bid Bond Guarantee: No Fee
The SBA Surety Bond Guarantee Program helps small businesses that cannot get bonding through regular channels. Here is the good news for bid bonds specifically:
Bid Bonds
The SBA charges no guarantee fee on bid bonds. Zero. The 0.6% fee only kicks in on performance and payment bonds.
P&P Bonds (for reference)
When you win and need performance and payment bonds, the SBA charges 0.6% of the contract price on top of the surety premium.
SBA Program Highlights
Do You Qualify for Low-Cost Bid Bonds?
Three factors influence whether a carrier provides bid bonds at little or no cost
Surety Relationship
You have a bonding line of credit with a surety company. This is the most important factor. Without this relationship, there is no reason for the surety to give anything away.
Bonding Capacity
The project fits within your bonding capacity. The surety needs to confirm they can write the performance and payment bonds if you win. If the project is too large for your capacity, the bid bond may not be available at any price.
Financial Strength
Reasonable credit score (680+), CPA-prepared financials, and a track record of completing projects. The stronger your profile, the more willing the surety is to invest in the relationship with low- or no-cost bid bonds.
All content is researched from official state and federal sources (.gov). BuySuretyBonds.com works with Treasury-listed surety carriers.
Frequently Asked Questions
Common questions about bid bond costs
Why are bid bonds low-cost for some contractors?
The surety's real revenue comes from the performance and payment bonds that follow a winning bid. Bid bonds can work as a loss leader: some carriers provide bid bonds at little or no cost for qualified accounts to secure the more profitable P&P bond business. The carrier decides whether and what to charge.
When would I have to pay for a bid bond?
You will pay for a bid bond if you don't have an existing surety relationship, if you're a high-risk applicant (poor credit, limited track record), or if you need a one-off bid bond without plans for performance and payment bonds. In these cases, expect a flat fee of $50-$250 per bond. Some sureties charge per bond regardless, but the fee is minimal compared to other bond types.
What is the SBA bid bond guarantee program?
The SBA Surety Bond Guarantee Program helps small businesses that can't get bonding through traditional channels. Under this program, the SBA charges no guarantee fee on bid bonds (the surety may still charge its own premium). The 0.6% guarantee fee only applies to performance and payment bonds, not bid bonds. The SBA guarantees 80% of the loss (90% for disadvantaged and veteran-owned businesses), making sureties more willing to write bonds for less-established contractors.
How much does a bid bond cost compared with the bid bond amount?
The bid bond amount (the coverage) and the cost (your premium) are completely different. Federal contracts require a bid bond amount of 20% of your bid price - on a $1 million bid, that is a $200,000 bond. But your cost for that bond is typically $0 if you have a surety relationship, or $50-$250 if you are paying a flat fee. The bid bond amount is what the project owner can claim if you fail to honor your bid.
Do I need a separate bid bond for every project I bid on?
Yes. Each bid bond is project-specific - it names the project owner, references the specific solicitation, and guarantees your specific bid. You cannot reuse a bid bond across multiple projects. If your carrier provides bid bonds at little or no cost within your P&P relationship, bidding on several projects at once may add little in bond premiums; the carrier decides.
What determines whether my bid bonds are low-cost?
Three main factors: (1) An existing surety relationship where you have a bonding line of credit with a surety company. (2) Sufficient bonding capacity for the project - the surety needs to confirm they can write the performance and payment bonds if you win. (3) A reasonable track record and financial profile. If you meet all three, some carriers provide bid bonds at little or no cost as part of the relationship; the carrier decides.
Related Construction Bond Costs
Bid bonds are just the first step in construction bonding
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Some carriers provide bid bonds at little or no cost for qualified accounts; the carrier decides