What Every Pennsylvania Contractor Needs to Know About Performance Bonds

Performance bonds are one of the most important financial instruments in the Pennsylvania construction industry. Whether you're bidding on a public school in Bucks County or a commercial development in Montgomery County, understanding how performance bonds work — and how to qualify — can make or break your ability to win contracts.

What Is a Performance Bond?

A performance bond is a type of surety bond that guarantees a contractor will complete a project according to the terms of the contract. If the contractor defaults, the surety company steps in to either complete the project or compensate the project owner for financial losses.

In Pennsylvania, performance bonds are required on virtually all public construction projects under the Public Works Contractors' Bond Law of 1967. Many private owners also require them as a condition of contract award.

Who Issues Performance Bonds in Pennsylvania?

Performance bonds are issued by licensed surety companies. The Stoll Agency works with some of the most respected names in the surety industry, including:

• The Hartford — a leading national surety provider with strong contractor programs
• Utica National Insurance Group — known for flexible bonding programs for small to mid-size contractors
• Travelers — one of the largest surety writers in the U.S.
• Liberty Mutual Surety — offering comprehensive bonding solutions for contractors of all sizes

How to Qualify for a Performance Bond

Surety underwriters evaluate several key factors when deciding whether to issue a performance bond:

• Financial strength — reviewed through CPA-prepared financial statements
• Work history — your track record completing similar projects on time and on budget
• Credit history — both personal and business credit are considered
• Management experience — the depth and experience of your leadership team
• Equipment and resources — your capacity to handle the project scope

Performance Bonds vs. Payment Bonds

In Pennsylvania, performance bonds are almost always paired with payment bonds. While a performance bond protects the project owner, a payment bond protects subcontractors and suppliers — guaranteeing they'll be paid even if the general contractor defaults. Together, they form the backbone of construction contract security.

How The Stoll Agency Can Help

The Stoll Agency has been helping Bucks County and Montgomery County contractors secure performance bonds for decades. Our team works directly with top-rated surety companies to find the right bonding program for your business — whether you're a first-time bidder or an established contractor looking to increase your bonding capacity.