Contractor bonding and funding FAQ
Straight answers on how bonds are underwritten, what they cost, and how mobilization funding fits alongside them.
Requesting a bond does not affect your credit.
Surety bonds
A surety bond is a three party agreement in which a surety guarantees to a project owner that a contractor will meet its obligations under a contract. It is a guarantee of performance, not an insurance policy for the contractor.
The principal is the contractor who buys the bond. The obligee is the project owner who requires it. The surety is the company that guarantees the contractor's obligation to the obligee.
A bid bond guarantees that you will honor your bid and enter the contract if you win. A performance bond guarantees that the project is completed to the terms of the contract. A payment bond guarantees that your subcontractors and suppliers get paid.
Once you are approved, bid bonds can be issued as fast as 1 hour after you send the bid details and an estimated job cost breakdown. Turnaround depends on complete information and underwriting review.
Payment and performance bonds can be issued as fast as same day once the contract information has been sent and reviewed. Turnaround depends on complete information and underwriting review.
CapStream writes bonds up to $10 million. There is no minimum bond size.
Bonding capacity
A bonding line is your approved bonding capacity. You establish it once through underwriting, then pull individual bid, performance, and payment bonds against it project by project instead of applying from scratch each time.
CapStream pairs a project financing commitment with your balance sheet and uses the SBA Surety Bond Guarantee Program, which together support a larger bonding program than a traditional surety would offer on your financials alone.
It is a U.S. Small Business Administration program in which the SBA guarantees part of a surety's loss on a bond issued to an eligible small contractor. That guarantee reduces the surety's risk, so small and newer contractors can get bonded for work they would otherwise be turned down for.
Underwriting reviews your contracting experience, company ownership, financial statements, and the largest jobs you have completed, along with the details of the specific project being bonded.
Mobilization funding
Mobilization funding is capital advanced before the project starts, so you can cover upfront costs such as bond premiums, materials, and equipment rentals without waiting on the first progress payment.
CapStream provides mobilization funding of up to 20% of the contract price.
No. CapStream mobilization funding requires no collateral. It is non-dilutive, so it does not block other company financing.
Repayment matches project cash flow rather than a fixed monthly schedule, and the loan is typically paid off at around 60 to 75 percent of project completion. Interest is charged on a declining balance and there are no prepayment penalties.
Still have a question about your project? Let's talk
Requesting a bond or loan does not affect your credit.