Illinois Performance Bond Guide
Performance bonds are common on Illinois public works and many private construction contracts. This concise, scannable guide explains what a performance bond does, who needs one, how costs are set, what underwriters review, a short checklist you can act on, and filing tips to avoid rejections.
IL performance bond
An IL performance bond guarantees the contractor (principal) will complete the work per contract terms and specifications. It protects the project owner (obligee) from added costs if the contractor defaults or fails to perform.
Illinois bond cost
Premiums depend on bond amount, contractor credit, company financials, experience, and claims history. Well-prepared contractors with clean records usually secure lower annual premiums; weaker credit can mean higher rates or collateral.
Performance bond cost
Expect market premiums typically ranging from around 0.5% to 3% for qualified contractors on standard projects. Larger contracts, complex scopes, or weak credit raise rates and lengthen underwriting time.
IL bond underwriting
Underwriters review tax returns, balance sheets, backlog, work history, trade references, and key personnel. For significant bonds they often request compiled or audited financials and a detailed work‑in‑progress schedule.
IL bond application
Provide the exact obligee name, contract amount, scope, start and completion dates, and delivery instructions. Include 3–12 months of bank statements, the most recent tax return, and signed credit authorizations for principals.
Performance bond filing
Deliver the executed bond exactly as the contract requires—sometimes recorded with the county, sometimes delivered to the owner. Common rejections stem from incorrect forms, misnamed obligees, or missing signatures.
IL payment bond
Many Illinois public projects require payment bonds in addition to performance bonds to protect subcontractors and suppliers. Payment bonds frequently equal 100% of the contract on public work.
Performance bond checklist
Confirm the exact obligee name and required bond form in the solicitation or contract packet.
Gather business formation documents, EIN, contractor license, and local registrations.
Prepare 3–12 months of bank statements and the latest tax return.
Compile backlog, project references, and a list of key personnel.
Sign credit authorizations for principals and request a preliminary broker quote.
Performance bond alternatives
If surety underwriting is constrained by credit, options include posting collateral, partial collateral arrangements, parent company guarantees, or third‑party guarantees. Discuss alternatives early with a surety broker to avoid delays.
Practical tips for contractors
Confirm obligee wording before ordering the bond.
Start bonding discussions as soon as you receive notice of award.
Keep a rolling prequalification packet to speed approvals.
Order larger bonds several business days before deadlines.
Action: get the exact bond form from the contract, assemble the checklist documents, contact an Illinois surety broker, and authorize credit checks so underwriting can proceed.