Get Merit Construction Sample Bondability Letter

Key Takeaways. A performance bond is issued to one party of a contract as a guarantee against the failure of the other party to meet the obligations of the contract. A performance bond is usually issued by a bank or an insurance company.

You may refer to them as Good Guy Letters, Sunshine Letters or just a Contractor Letter of Bondability. These letters have been around a long time, and their popularity has seen an uptick in recent years.

A letter of Bond Ability is a formal document provided by a bond company that indicates your firm has a performance bonding facility in place. It might also say what project limits the bonding company is comfortable supporting.

Bonding capacity is the maximum amount of surety credit a surety company will provide to a contractor. It is generally expressed in terms of the largest single project the surety would be willing to issue and the maximum amount of contract backlog a contractor can hold.

A letter of bondability, statement of bonding limits or statement of bondability are synonymous terms for a simple declaration of a surety underwriter that a particular contractor qualifies for some level of access to contract bond capacity.

Surety Letter means a letter from a surety company confirming a Respondent Team Member's ability to obtain a performance bond and payment bond in respect of the Project and meeting the requirements of Section 4.11 (Surety Letter).

A Bond Capacity Letter provides evidence of general “bondability” by a General Contractor (GC) to an Owner (or a Subcontractor to a General Contractor). Oftentimes, owners require General Contractors to provide this letter as a way to prequalify the GC for a particular job.