What is a Bid Bond Bank Guarantee?
A bid bond bank guarantee is another name for a surety bond known as a bid bond. A bid bond is required for many governmental contracts and then the high bidder will be required to get a performance bond. A performance bond is usually given to a construction company when they need to be bonded for a surety bond job. In addition, a performance bond is usually granted in conjunction with payment bond. A performance bond is required for any governmental contract as dictated by the Miller Act. Most states have also passed statutes that require a performance and payment bond in their own states and these laws are known as little miller acts.
The bid bond bank guarantee shows that the bank is providing the suretyship on behalf of the bidding company. This guarantee has several benefits to the bidding company, such as allowing them to bid on multiple contracts at the same time without having to place large amounts of funds into escrow. Otherwise, significant cash flow is used up in the bidding process, which is better utilized in the actual performance of the jobs.
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