Private Owners & Bankers

Surety bonds are one way to manage risk on a construction project. By requiring the contractor to obtain a surety bond, you are assured a qualified contractor and protected from financial loss in the event of contractor default.

The materials below are recommended materials for Private Owners & Bankers:

Bonding protects and empowers. Take a look at why bonding matters as SFAA compares the outcome of two similar projects – one with a bond and one without.

Why Get A Bond from SFAA Communications on Vimeo.

The Benefits of Surety Bonds to Lenders

This is a customizable presentation for Members and Subscribers to explain the benefits and Surety bonds to lenders.

Investment Protection for Today’s Construction Lender

Find out how surety bonds offer investment protection for today’s construction lender.

Value of Bonding Private Projects

Why Do Contractors Fail?

Construction is a complicated business that faces ever-changing conditions, and those who are not prepared or capable of meeting these demands may ultimately fail. Every year thousands of contractors, whether in business for two or twenty years, face bankruptcy and business failure.

According to BizMiner, of the 986,057 general contractors and operative builders, heavy construction contractors, and special trade contractors operating in 2011, only 735,160 still were in business in 2013—a 26.24% failure rate. These businesses leave behind unfinished private and public construction projects—and still worse, millions of dollars in losses to project owners and taxpayers. Public and private construction project owners can mitigate the risk of contractor failure by requiring bid, performance, and payment bonds.

Surety Bonds at Work

Avoid performance and financial issues. Learn how Surety Bonds enable projects to be completed.

Managing Risk

For years, surety bonds have been mandated by law for federal public construction projects under the Miller Act of 1935. Many state and local governments also require surety bonds on their public construction projects with “Little Miller Acts.” Surety bonds also are used for many private projects as well. Moreover, an increasing number of construction lenders are now recognizing the wisdom of requiring contract surety bonds to protect loans secured by private sector projects. Performance and payment bonds protect your lending capital by ensuring completion of the contract and preventing subcontractors from filing mechanics’ liens on the project.

Contract Surety Bonds: Protecting Your Investment

Construction is a complicated and risky enterprise— even capable and well-established contractors fail. For more than 100 years, schools, cities, counties, states, and the federal government have successfully managed risk and protected taxpayer dollars with bid, performance, and payment bonds.

Protect Your Construction Lending Capital With a Surety Bond

Construction is a risky business, and the need to protect private owner investment capital remains. According to BizMiner, one in four contractors fails. For years, surety bonds have been mandated by law for federal public construction projects (exceeding $150,000) under the Miller Act of 1935. Many state and local governments also require surety bonds on their public construction projects with “Little Miller Acts.” Surety bonds have been used voluntarily for many private projects as well. Moreover, an increasing number of construction financiers are now are recognizing the wisdom of requiring contract surety bonds to protect loans secured by private sector projects.

Claims Process

Completion is the goal of everyone involved in a construction project. Although the purpose of a surety bond is to assure a qualified contractor capable of completing the project, contractors do experience problems, and default does occur.

AGC Surety Claims Guide

The contract surety bond claims process, developed by the Associated General Contractors of America (AGC).

Risk Management Resources

When it comes to limiting exposure to the inherent risks of construction, there is no substitute for time-tested contract surety bonds. While proponents of other risk management resources such as bank letters of credit or subcontractor default insurance claim they provide adequate protection, they fall short of the protection and services of a surety bond.

Surety Bonds vs. Subcontractor Default Insurance

A surety bond is a comprehensive risk transfer mechanism that provides the prequalification of subcontractors; shifts the entire risk of the principal’s default from the obligee to the surety; requires the surety to manage default situations; and provides 100% payment protection to certain subcontractors and suppliers. SDI is often described and marketed as an alternative to traditional performance and payment bonds, but it is merely a traditional insurance policy and provides no payment protection for subcontractors, suppliers, and laborers.

Surety Bonds vs. Bank Letters of Credit

This brochure comparing surety bonds with letters of credit makes it crystal clear why surety is the preferred method of guaranteeing an obligation or project. No charge for Members or Non-Members for up to 25 copies of this brochure.

Qualification Resources

It is important to know whom you are dealing with when applying for surety bonds. Most large property and casualty insurance companies have surety departments. In addition, there are some insurance companies for which surety bonds make up all or most of their business.

Surety Companies: What They Are & How to Find Out About Them

This updated brochure describes some resources that offer information on surety companies including surety bond producers, state insurance departments, U.S. Department of the Treasury and A.M. Best Company.

Electronic Filing Resources

The objective of surety automation is to employ technology to streamline processes, reduce redundancies and increase productivity in the surety bond process, which spans the application for the bond, the execution and submission of the bond and the processing of premium. The objectives of surety automation are realized fully when methodologies involving transmission, security, verification and data integration encourage the broadest participation by surety companies, surety bond producers, contractors, project owners, risk managers and other parties in the bond process. Any methodology should seek to maximize interoperability among disparate systems. Broad participation in surety automation is the vision. Interoperability through open standards and systems is the way to that vision.

News & Events

Surety Industry Advances Critical Federal Policy

SFAA and NASBP led a Legislative Fly-In with members from across the industry to educate Congress on the value of construction surety bonds and advocate for key legislative priorities. Surety professionals held over 135 meetings with policymakers and staff to emphasize the significant savings that surety bonding provides to taxpayers across the country.

The Surety & Fidelity Association of America Foundation Awards Record $90,000 in Scholarships

The Surety & Fidelity Association of America Foundation (SFAA Foundation) has awarded a record $90,000 in scholarships to thirty-one students through its Surety and Fidelity Intern and Scholarship Program.

SFAA’s Alex Gleason Named Among Nation’s Top Lobbyists for 2025

The Surety & Fidelity Association of America (SFAA) has announced that Alex Gleason, Head of Federal Government Affairs, has been named one of the 2025 Top Lobbyists by the National Institute for Lobbying & Ethics (NILE).

Private Owners & Bankers