Commercial Bonds for California Businesses.

Insurance protects you. A bond protects someone else (the obligee). If a claim is paid on your bond, the surety bills you for reimbursement — you don't get free money like with insurance. That's why surety underwriting focuses heavily on credit (will you pay them back?), business financials, and prior bond claims. Bonds are essentially a credit product wrapped in an insurance-like form.

Credit. The CSLB bond face amount is the same $25,000 for every contractor, but surety premium is risk-priced. A contractor with a 750+ credit score pays the base rate (often $125-$200/year). A contractor with a 600 score might pay 4-5x that. A 550 score might require collateral or full prepayment. We work with multiple sureties so even credit-challenged applicants can get bonded — we just place them with markets that specialize in higher-risk bonds.

When a corporation, LLC, or partnership holds a CSLB contractor license, the qualifying individual (RMO or RME — the person whose experience and exam qualified the business) sometimes needs to post their own $12,500 Bond of Qualifying Individual. The rules depend on the QI's ownership percentage. We file the QI bond alongside the contractor bond for any business that needs it, same day.

A performance bond guarantees you'll complete a project according to contract. If you don't, the obligee can file a claim and the surety steps in (typically by hiring another contractor to finish). Performance bonds are required on virtually all California public works projects (state, county, city, school district, university — generally any project over $25,000) and on many private commercial jobs. They're typically 100% of the contract value. They're not bought on demand — you have to be pre-qualified by a surety, which can take 30+ days the first time and requires a financial review.

A payment bond guarantees you'll pay your subcontractors and suppliers on the project. Required alongside the performance bond on California public works. It protects subs and suppliers from non-payment by allowing them to file claims against the bond instead of mechanic's liens against public property (which they can't do).

Bonding capacity is the total dollar value of bonds a surety is willing to issue for you at any given time — typically a single-job limit and an aggregate limit. Getting meaningful capacity requires CPA-prepared financials, a business plan, a track record of completed projects, and personal indemnification from owners. For a small contractor starting out, capacity might be $500K aggregate. For a mid-sized firm with strong financials, $10M+ is achievable. We coordinate with surety underwriters to grow your capacity over time.

For private residential work, almost never. For public works projects above $25,000 (the California threshold), yes — both performance and payment bonds are typically required. The general contractor on the project usually handles bonding for their own scope, but if you're working as a sub on a large public project, your GC may pass down a requirement that you post a bond too. Read the bid documents carefully.

Yes, but the path is different. For poor credit, we work with sub-prime surety markets that price the additional risk into the premium (and sometimes require collateral or a personal letter of indemnity). For prior bond claims, we have to disclose them and explain the circumstances — sureties want to know what happened and whether it's likely to recur. We've placed bonds for contractors with bankruptcies, prior claims, and credit issues. It costs more, but it's almost always possible.