Texas Performance Bond Guide
Performance bonds are a standard requirement for many Texas public and private construction contracts. This concise guide explains what a performance bond does, who needs one, how costs are determined, what underwriters review, a short checklist you can act on, and practical filing tips to avoid rejections.
TX performance bond
A TX performance bond guarantees the contractor (principal) will complete the contract per plans and specifications. It protects the project owner (obligee) from added costs if the contractor defaults or fails to perform.
Texas bond cost
Premiums depend on the bond amount, contractor credit, company financials, experience, and claims history. Typical market rates range from around 0.5% to 3% for qualified contractors; weaker credit or complex projects can increase costs or require collateral.
Performance bond cost
Large contract values and higher perceived project risk raise the premium. Public works have predictable thresholds in Texas that often trigger both performance and payment bonds, which affects the total bonding need and price.
TX bond underwriting
Underwriters review tax returns, balance sheets, work history, backlog, references, and key personnel. For substantial bonds expect compiled or audited financials, a work‑in‑progress schedule, and strong trade references.
TX bond application
Provide the exact obligee name, contract amount, scope, start/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. The most common rejections come from incorrect forms, misnamed obligees, or missing signatures.
TX payment bond
Many public projects in Texas require payment bonds in addition to performance bonds to protect subcontractors and suppliers. Payment bond thresholds and amounts vary depending on the governmental entity and contract value.
Performance bond checklist
Obtain the exact obligee name and bond form from the contract packet.
Gather business formation documents, EIN, and contractor license numbers.
Prepare 3–12 months of bank statements and the latest tax return.
Compile backlog, key project references, and list of key personnel.
Sign credit authorizations for principals and request a preliminary broker quote.
Performance bond alternatives
If traditional surety underwriting is constrained, options include posting collateral, partial collateral arrangements, parent company guarantees, or third‑party guarantees. Discuss options early with a surety broker to keep the project moving.
Practical tips for contractors
Confirm obligee wording before ordering the bond. Start bonding discussions upon notice of award. Keep a rolling prequalification packet ready 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 a Texas surety broker, and authorize credit checks so underwriting can proceed.