Certain banking institutions and surety bond companies will provide bonding coverage only up to the amount of liquid assets that you have. Upon approval, the Small Business Administration (SBA) offers bonding up to $2 million of coverage for contract bids for small or emerging business owners who cannot obtain surety bonds through regular means. The contractor must qualify as a small business in addition to meeting other bond qualifications.

Bonding, or surety bond, is an agreement by a third party promising to pay or have the work completed if a vendor does not fulfill his or her obligations under a contract. A bond is not an insurance policy. It does not cover loss due to personal injury or property damage; it only provides assurance that the work contracted is satisfactorily completed.

A business that performs contracting services should be bonded. Certain states do not require a business to be bonded. However, a customer will most likely ask a business to be bonded before an agreement for services is made. Think of bonding your business as a promotional tool. Being bonded may get you a contract you may otherwise not have the opportunity to receive if not bonded. A customer is more likely to hire a contractor that is bonded than hire one that is not.

If you are a business owner with only a few employees, for example, a cleaning or pet-sitting service, you may still want to be bonded. A dishonesty bond would reimburse the client for loss of stolen items as a result of a dishonest employee.

If you are a business owner with no employees, you may still want to consider being bonded. As a business owner, you know that you would not steal from your clients; however, to your clients you are a complete stranger, and being bonded is that extra reassurance for your potential customers.