Finally... A Clear Guide to Janitorial Performance Bonds
Look, I get it. You're trying to win that school district contract or finally break into federal buildings, and suddenly everyone's asking about bonds. Let's cut through the confusion and get you what you actually need.
Fidelity Bond (Employee Dishonesty)
Protects clients from employee theft
Performance Bond (Contract Guarantee)
Guarantees you'll complete the contract
Here's What Nobody Tells You About Janitorial Bonds
I've been in this industry long enough to watch countless cleaning companies hit the same wall. You're doing great with commercial clients, maybe you've got that medical building or a couple office complexes... then you see a government RFP that could double your business overnight.
School district needs cleaning. $500,000 annual contract. Perfect fit for your crew size.
Then you read those three dreaded words: "Performance Bond Required."
And suddenly you're drowning in confusion because everyone online talks about "janitorial bonds" but they're actually talking about those cheap $100 fidelity bonds that protect against employee theft. That's NOT what the government wants. They want a performance bond - a completely different animal that costs real money and requires actual underwriting.
Let me save you weeks of confusion:
- Fidelity bonds = Protects clients if your employees steal (cheap, easy)
- Performance bonds = Guarantees you'll complete the contract (expensive, requires good credit)
Who Actually Requires These Bonds?
(Spoiler: It's not who you think)
Here's the thing... federal janitorial contracts under $350,000 typically DON'T require performance bonds. The FAR regulations treat service contracts differently than construction.
Good news: Most federal building cleaning contracts operate without bonds!
School districts, cities, counties - they LOVE requiring bonds. California requires them over $25,000. Texas over $100,000. Your local school board might require them for any amount.
- • California: $25,000+
- • Texas: $100,000+
- • Florida: $200,000+
- • New York: Varies by agency
Most commercial clients just want that cheap fidelity bond to protect against employee theft. Hospitals might ask for performance bonds, but it's rare.
Note: Having bonds can help you win commercial contracts even when not required!
Cleaning companies with healthcare contracts may need specialized Medicare bonds for compliance. When your janitorial services extend to medical facilities providing DME services, Medicare DME bonds ensure regulatory compliance for healthcare-related operations.
Under $100,000 Contracts
Good news: Many contracts this size don't require performance bonds at all. You might get away with just a fidelity bond!
Reality check: If you're just starting out, that $500K school district contract might cost you $15,000/year in bonding. Factor that into your bid... or start smaller.
Here's something most bond agents won't tell you upfront: The SBA will guarantee your bond even with credit issues. They just increased limits to $14 million for federal contracts. Yeah, million with an M.
Quick Bond Program
For contracts up to $500K
- ✓ No financials required
- ✓ 1-week approval
- ✓ Bad credit OK
Standard Program
For larger contracts
- ✓ Up to $14M federal
- ✓ 90% guarantee for minorities
- ✓ 80% for others
Personal story: I watched a 3-person cleaning company with a 580 credit score land a $400K federal contract using the SBA program. Their bond cost? $4,800/year. Without SBA? They were quoted $18,000... if they could get approved at all.
Your 5-Week Roadmap to Getting Bonded
(Start 2-3 months before you need the bond. Trust me on this.)
You'll need:
- • 3 years tax returns
- • Bank statements (3 months)
- • List of current contracts
- • Personal financial statement
Missing something? Start anyway. Perfect paperwork is the enemy of done.
Look for someone who:
- • Works with 15+ surety companies
- • Knows the SBA program
- • Returns calls same day
- • Explains things clearly
What actually happens:
- • Fill out the questionnaire
- • Underwriter reviews everything
- • They ask for more docs (always)
- • You provide them quickly
They'll evaluate your Capital, Capacity, and Character. Having two out of three is usually enough.
You'll receive:
- • Your rate (1-15% of bond)
- • Any conditions
- • Indemnity agreement to sign
- • Payment terms
Good credit? Expect 1-3%. Poor credit? 5-15% with possible collateral.
Final steps:
- • Sign the documents
- • Pay the premium
- • Receive bond (same day)
- • Submit to agency
Growing your bonding power:
- • Complete contracts on time
- • Keep cash in the business
- • Update financials quarterly
- • Build surety relationship
Every $1 in working capital = $10-20 in bonding capacity. Remember that.
Mistake #1: Confusing Bond Types
Buying a $150 fidelity bond thinking it covers your $500K performance bond requirement. The contract starts next month and now you're scrambling.
Fix: Always read the RFP. Look for "performance and payment bond" language.
Mistake #2: Bidding Without Bond Capacity
You win the bid! Celebration! Then you apply for the bond and get denied. Now you lose the contract AND your reputation.
Fix: Get pre-approved for bonding BEFORE you bid. It's free and saves heartbreak.
Mistake #3: Forgetting Bond Costs in Your Bid
That $300K contract looked profitable until you realize the $9,000 annual bond premium wipes out your margin.
Fix: Add 2-3% to your bid for bonding costs. Better safe than sorry.
Mistake #4: Using Your Cousin's Insurance Guy
Most insurance agents know nothing about surety bonds. You need a specialist who works with multiple surety companies.
Fix: Find an actual surety bond specialist. Check the NASBP directory.
Year 1: Maria's cleaning company had 3 employees, cleaning residential homes. She got a $100 fidelity bond "just in case." Revenue: $120K.
Year 2: Landed first commercial client - a medical office. Used fidelity bond as credibility builder. Added 2 employees. Revenue: $280K.
Year 3: Applied for SBA bond program. Got approved for $500K capacity despite 640 credit score. Won first school contract. Revenue: $480K.
Year 4: Perfect performance on school contract. Bonding capacity increased to $1M. Added second school. Revenue: $980K.
Year 5: Won district-wide contract. 15 schools. $2.8M annual. 28 employees. Living the dream.
The Questions You're Too Embarrassed to Ask
Not necessarily. The SBA program exists specifically for folks like you. You'll pay more (maybe 5-10% instead of 1-3%), might need collateral, but you can get bonded. Start with smaller contracts and build from there.
Tough but possible. You'll need strong personal credit (700+), some cash in the bank, and probably start with contracts under $100K. Having industry experience helps tremendously - if you worked for another cleaning company for 5 years, mention that.
The surety pays the client, then comes after you for reimbursement. Yes, they can take your assets. Yes, it ruins your bonding capacity for years. But here's the thing - sureties HATE paying claims. They'll work with you to avoid default. Communication is key.
For government work? Usually yes. The fidelity bond shows you're protecting against employee theft ($100-350/year - just get it). The performance bond is what they actually require in the RFP. Some contracts explicitly require both.
Rule of thumb: 10% of your desired bonding capacity. Want to bond $500K in contracts? Have $50K in working capital. But here's the secret - an unused line of credit counts as working capital for bonding purposes. Game changer.
Ready to Stop Losing Contracts to Bonded Competitors?
Look, I know this feels overwhelming. But every large cleaning company started exactly where you are right now. The only difference? They took the first step.
No obligation. No pushy sales calls. Just honest advice about whether you're ready for bonding and what it'll really cost. That school district contract isn't going to win itself.