Date Published: April 14, 2017

advance payment contract bondA contractor provides a advance payment contract bond which guarantees that the contractor will repay or settle the cash paid in advance by the owner of the contract. For instance a manufacturer enters into a contract to provide specialized machinery. The Party purchasing the specialized machinery may be required to pay 50% of the value of the contract up front to the manufacturer. To protect this payment, the purchasing party, in this case would be the Obligee, may require an  advance payment contract bond.

In the event of the contractor acting against the contract, the surety company ensuring the bond will recover any loses which the contractor must repay to the surety company.

 If a new contractor is requesting an advance payment bond, there are some supporting documents that may be required.

  • Contractor questionnaire
  • Financial statements for the business (income statements, balance sheets, statement of cash flows, aging schedule for accounts)
  • Personal financial statements for the business owner(s).
  • Copies of insurance (general and professional liability, worker’s compensation, etc).
  • Current work in progress schedule
  • Copy of contractor’s license and any other necessary licenses
  • Bank reference letter
  • Copy of trust if owner(s) have any assets held in the trust
  • Articles of either incorporation, LLC agreement, or partnership agreement
  • Resume for all key personnel of the business

An advance payment contract bond assures the owner of the contract the contractor will fulfill his/her promised duties. A bond tells clients the contractor is legal and allows clients to be assured they will be financially and legally protected in any case of fraud or misconduct. The bond amount varies since each contract job costs a different amount, so premium for the bond will vary.

Surety Solutions Insurance Services, Inc, (Surety1) is a bond only independent insurance agency. Since 2003, the company has been the premier online provider of surety bonds in the U.S. Licensed in all 50 states, Surety1 maintains an A+ rating from the Better Business Bureau .  Fro more information, contact Surety1 toll free at (877)654-2327 or email us at

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