Arkansas Bid Bonds

Arkansas Bid Bonds

Surety Bond Professionals is a family owned and operated bonding agency with over 75 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your bid bond needs.

What Are Arkansas Bid Bonds?

Arkansas bid bonds are designed to protect public and private construction project owners against financial losses caused by contractors who:

  • Submit inaccurate or unrealistic bids,
  • Don’t have the capacity to purchase the necessary performance and payment bonds if awarded the contract, or
  • Don’t accept the job if chosen as the winning bidder. 

An Arkansas bid bond is a contractor’s guarantee that none of the above will occur. If the contractor (the bond’s “principal”) doesn’t live up to that guarantee, the bond provides a way to compensate the project owner (the bond’s “obligee”) for monetary damages. 

Who Needs Them?

Arkansas state or local contracting authorities can require a bid bond, and so can private project owners. When a bid bond is required, the usual amount is 5 to 10% of the total bid price. 

How Do Arkansas Bid Bonds Work?

The third party to an Arkansas bid bond, along with the obligee and the principal, is the “surety” -- the bond’s guarantor. The principal is legally obligated to pay valid claims against the bid bond, but the surety guarantees their payment. To guarantee the swift resolution of a claim, the surety will pay the claimant directly, and then be repaid by the principal. Not repaying the surety is likely to result in the surety taking legal action against the principal to recover the claim amount.  

How Much Do They Cost?

The obligee for the Arkansas bid bond, the project owner, sets the necessary bond amount. Typically, this represents 5% or 10% of the overall bid sum. 

The contractor's personal credit history is the main factor taken into account when underwriting smaller contracts and ventures. For larger projects, the location of the project and the stability and creditworthiness of the contractor may be further looked into by the assurance's underwriters to determine the ultimate cost. 

Surety Bond Professionals offers bid bonds at no cost. These bonds are usually provided with the idea that you will purchase the surety for Performance and Payment (P&P) bonds P&P in order to proceed with the project if you are granted the contract.

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Our surety bond professionals will help you grow your revenue by maximizing your surety capacity. Call us today!