Surety Bonds and Bank Letters of Credit Comparisons

By:  Jack Anderson, President This is the 3rd post in a series exploring surety bonds and bank letters of credit – what each is, their differences, and advantages and drawbacks to each. What is the expected cost of each instrument? For a surety bond, cost is generally 0.5% to 2% of the contract price.  A bond is project specific and covers the duration of the contract.  The cost of the bond is included in the contractor's bid price. For a bank LOC, the cost is generally 1% of the … [Read more...]