Bid, performance, payment, maintenance, and subdivision bonds for Texas contractors — from the small Houston right-of-way permit to the multi-million dollar Harris County public-works job. We build bonding programs with you, not just quotes.
A contractor bond — also called a contract surety bond — is a financial guarantee that a contractor will fulfill the terms of a specific construction contract. It's different from a commercial license bond: a license bond is tied to your ongoing business license, while a contract bond is tied to one project.
Three parties are involved:
The five most common contractor bonds in Texas are:
Unlike license bonds, which are underwritten mostly on credit, contractor bonds are underwritten heavily on the "three Cs" of contract surety: capital, character, and capacity. The surety is effectively extending you a line of credit equal to the bond amount — if you default, they have to step in and finish your work. That means they want to know you can do the job.
Contract bonds in Texas are triggered by statute, by local ordinance, or by contract. Here are the thresholds every Houston-area contractor should know.
| Project type | Authority | Bonds required |
|---|---|---|
| Public works over $25K | Texas Government Code Ch. 2253 (Little Miller Act) | Performance + Payment bonds, each 100% of contract |
| Federal projects over $150K | Miller Act (40 USC §3131) | Miller Act bond (performance + payment, 100% each) |
| Houston public works | City of Houston Purchasing | Performance + Payment bonds + separate city compliance bonds |
| Harris County projects | Harris County Purchasing & Engineering | Performance + Payment + Maintenance bonds |
| Houston right-of-way work | City of Houston Public Works | Right-of-way bond + sidewalk/driveway/curb bond ($2,000) |
| Subdivision development | City of Houston Planning / Harris County | Subdivision bond (100–125% of improvements) |
Private commercial projects are not statutorily required to be bonded in Texas — but most major Texas developers and general contractors require subs to post performance and payment bonds as a contract term, especially on projects over $250,000.
You pay a premium — a percentage of the bond amount — based on the financial strength of your business, your personal credit, your experience on similar work, and the size and risk of the specific project.
| Applicant profile | Premium rate | $100K bond | $500K bond | $1M bond |
|---|---|---|---|---|
| Standard market (strong credit + financials) | 1 – 3% | $1,000 – $3,000 | $5,000 – $15,000 | $10,000 – $30,000 |
| Middle market (average credit, limited history) | 3 – 5% | $3,000 – $5,000 | $15,000 – $25,000 | $30,000 – $50,000 |
| SBA / specialty (weaker credit, new contractor) | 5 – 10% | $5,000 – $10,000 | $25,000 – $50,000 | $50,000 – $100,000 |
| Hard-to-place (credit challenges + prior claim) | 10 – 15% | $10,000 – $15,000 | $50,000 – $75,000 | Case-by-case |
Bid bonds are typically issued at no additional cost when paired with performance and payment bonds at contract award. Maintenance bonds are often included at no separate charge on the performance bond premium. Final pricing depends on your full underwriting file — call us with your contract in hand for an exact number.
Every contractor bond below is one we write for Texas projects. Each links to a page with legal thresholds, underwriting guidance, and a direct application link.
Required by Texas cities and counties (Houston, Dallas, Harris County) as a condition of holding a contractor license.
Guarantees that if you win the bid, you will enter the contract and post the performance/payment bonds. No premium on most bid bonds.
Guarantees the project is completed per contract terms. Required on every public project over $100K in Texas (Gov Code Ch. 2253).
Guarantees subcontractors, laborers, and suppliers are paid. Paired with performance bond on public work under the Texas Little Miller Act.
Guarantees workmanship for a warranty period (1–2 years typical) after project completion.
Guarantees delivery of materials per the purchase agreement for public-works suppliers.
Required by Harris County and City of Houston to guarantee completion of streets, drainage, utilities on new subdivisions.
Guarantees completion of sidewalks, drainage, landscaping, or other site improvements required by a permit.
Required by City of Houston, TxDOT, and local cities to work in the public right-of-way.
Required on federal construction contracts over $150,000. Combines performance and payment bond under 40 USC §3131.
Required when construction temporarily encroaches on public property or right-of-way.
Used mostly on developer-financed projects — guarantees the project finishes even if the original contractor defaults.
The first contractor bond is the hardest. Once your underwriting file is set up with a carrier — your "bonding program" — subsequent bonds on similar projects issue quickly and at your established rate.
Pull the bid documents or contract and look for the bond clause. For Texas public work, this will cite Government Code §2253. For federal work, it cites 40 USC §3131. Call us with the documents in hand — we'll tell you the exact bond, amount, and obligee on the first call.
For smaller bonds (under $250K) we just need a credit check and a one-page contractor questionnaire. For larger bonds, we'll ask for CPA-prepared financials, a personal financial statement, a work-in-progress schedule, and a list of similar completed projects.
We shop your file across our A-rated contract surety carriers — including SBA-backed programs for newer or credit-challenged contractors — and lock in a single-bond and aggregate capacity. You'll know how much bonded work you can carry at once.
Every contractor-bond principal signs a general indemnity agreement with the surety — the document that lets the surety recover any claim payout from you. Owners and spouses usually sign individually. This is standard; without it, no contract bond issues.
Once your program is in place, individual bonds on qualifying projects issue quickly — usually same-day or next-day for bid bonds, 24 to 48 hours for performance and payment bonds on mid-size contracts. You pay the premium per bond.
We work with contractors bidding Harris County public works, City of Houston right-of-way projects, TxDOT, and private commercial developers across the Houston metro. We know the obligees and what they want to see on a bond form.
For newer contractors or those with credit challenges, we access the SBA Surety Bond Guarantee Program — which can bond qualifying contractors up to $9 million per contract when the standard market would decline.
We don't just sell a single bond. We build a long-term bonding relationship that grows with your business — increasing your single-job and aggregate capacity as your financials strengthen.
A contract bond (bid, performance, payment, maintenance) is tied to a specific construction project. It guarantees that you will fulfill the terms of one contract. A commercial license and permit bond is tied to your ongoing business license (electrical contractor, general contractor, HVAC, etc.). You will often need both: a license bond to operate, and contract bonds for each public-works project you bid.
Premium on standard contract bonds typically runs 1% to 3% of the contract amount for contractors with strong financials and good credit. Contractors with credit or financial challenges may pay 3% to 5%, and SBA-backed programs can push newer or weaker applicants up to 8–15%. Bid bonds are usually issued with no premium when paired with a performance and payment bond at contract award. A $500,000 performance + payment combo on standard credit will typically cost $5,000–$15,000 annually.
The Texas Little Miller Act (Government Code Chapter 2253) requires a performance bond on every state or local public-works contract over $100,000, and a payment bond on every public-works contract over $25,000. On federal projects, the Miller Act (40 USC §3131) requires performance and payment bonds on every contract over $150,000. Private projects are not statutorily required to be bonded, but many Texas private owners require bonds contractually.
Small bid bonds and license bonds are usually issued same-day. Performance and payment bonds on contracts under $500,000 can typically be issued within 24 to 48 hours once your underwriting file is complete. Larger contracts — $1M and up — usually require a full financial package (corporate financials, personal financial statements, work-in-progress schedule) and may take 3 to 7 business days for the first bond. Once you're set up with a bonding program, subsequent bonds on the same program issue much faster.
Yes, but contract bonds are underwritten more heavily than commercial license bonds. Surety companies look at your personal credit, business financials, work-in-progress, and experience on similar projects. If your credit is weak, we have access to specialty programs — including SBA-backed surety bond guarantees — that can underwrite applicants denied by the standard market. Expect a higher premium (5–15% vs. 1–3%) and a lower single-bond capacity, but approval is usually achievable.
For small contract bonds (under $250,000), a credit check and a one-page contractor questionnaire are usually enough. For larger bonds, expect to provide: (1) CPA-reviewed or audited corporate financial statements, (2) a personal financial statement from every owner, (3) a work-in-progress schedule, (4) a reference list of completed similar projects, (5) a copy of the contract or bid package. The stronger and cleaner this file, the higher your bonding capacity — which is how much total bonded work you can have on at once.
For contract bonds, no — the bond is tied to a specific project, not a city. One performance bond on a Houston job does not cover a Dallas job; you post a new bond for each project. For license bonds, many Texas cities do require contractor registration with a local bond. Houston, for example, requires a $2,000 bond for sidewalk, driveway, curb and gutter contractors. If you bid across multiple Texas cities, you'll keep one central master surety relationship with us and post bonds as each job requires.
If the obligee (the owner or government agency) believes you have defaulted, they notify the surety. The surety investigates — this takes weeks, not hours. If the claim is valid, the surety has three typical options: (1) finish the project themselves, (2) pay for another contractor to finish it, or (3) pay the obligee up to the bond amount. In every case, the surety then collects the full amount back from you under the indemnity agreement every principal signs. A paid claim materially damages your bonding capacity going forward.
Free quote, no obligation. Most bid bonds same-day. Build a bonding program that grows with your business.