A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments.
A bond has an end date when the principal of the loan is due to be paid to the bond owner and usually includes the terms for variable or fixed interest payments that will be made by the borrower. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations. Owners of bonds are debtholders, or creditors, of the issuer.
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Contractors License Bond
Contractor License bond is a surety executed in favor of the state that a contractor is licensed to do business. It is a requirement for the issuance or renewal of a contractor's license and thus must comply with the state's specific requirements. A claim may be filed with the surety company should the contractor violate or fail to comply with the terms and conditions of the Contractor License Bond.
A surety bond is a written agreement where a surety obligates itself to a party who is the recipient of an obligation to answer for the failure or default of the principal or primary party to perform his obligation. There are two main bond types: contract bonds such as performance and bid, and commercial bonds like license and permit.
A fidelity bond is a form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees.
A performance bond is a contract surety bond that secures the project owner against financial loss in the event the contractor fails to perform the contract in accordance with its terms and conditions.
A bid bond is a contract surety bond that protects the project owner financially should the contractor wins the bid and fails to execute the contract or provide the required surety bonds such as the performance and payment bonds