How much does a performance bond cost on a $1 million project in 2026?
The actual premium math — by credit tier, contractor experience, and surety carrier — for a $1M construction performance bond in 2026.
Updated June 2026 · BettrBonds — Contract surety for SE contractors
Short answer
A performance bond on a $1 million construction project in 2026 typically costs $7,500 to $30,000 in premium — between 0.75% and 3% of the contract value. A first-tier contractor (strong financials, 5+ years bonded experience, 700+ personal credit) pays 0.75%-1.25%. Mid-tier pays 1.5%-2.25%. Newer or credit-challenged contractors pay 2.5%-3% in the standard market, or qualify for the SBA Bond Guarantee Program at 2.4% federal / 2.0% state rates.
2026 performance bond cost by contractor tier
Tier
Profile
Rate
$1M bond premium
Tier 1 (best)
5+ years bonded, $300K+ working capital, owners 720+ credit, clean WIP
0.75% – 1.25%
$7,500 – $12,500
Tier 2
3-5 years bonded, $150K+ working capital, owners 680+ credit
1.5% – 2.25%
$15,000 – $22,500
Tier 3
1-3 years bonded OR owners 640-680 credit OR limited financials
2.25% – 3%
$22,500 – $30,000
SBA federal program
Hard-to-bond contractors, contracts to $14M federal
2.4% flat
$24,000
SBA state program
Hard-to-bond contractors, contracts to $9M state/private
2.0% flat
$20,000
Rates are 2026 indicative ranges across active surety carriers writing SE contractors. Actual premium depends on the six underwriting factors below.
What determines your rate
Six factors drive the premium more than anything else:
Personal credit of all owners with 10%+ stake — biggest single factor under $5M annual revenue. A 720 credit owner pays roughly half the rate of a 660 credit owner on the same project.
Business financial statements — working capital (current assets minus current liabilities), net worth, and profit trend over the last 3 years.
Bonding history — how many bonds and total dollar volume completed without claims. A contractor with 20 prior bonds and zero claims is treated differently than a first-timer.
Work-in-progress (WIP) schedule — total uncompleted contract value, how it's spread across projects, and how the new bond fits relative to available capacity.
Project specifics — owner/obligee reputation, contract terms (especially liquidated damages and time-for-completion), complexity, and total duration.
Industry experience — years in business AND years in the specific trade/scope of work being bonded.
Performance bond + payment bond — usually one premium
Most public construction contracts (federal Miller Act, state Little Miller Acts) require BOTH a performance bond AND a separate payment bond. Sureties typically issue them as a combined "P&P" bond on the same form for one premium. The combined premium on a $1M project is the same range as a standalone performance bond — $7,500 to $30,000 — because the payment bond is bundled at no extra charge in most carriers' rate manuals.
Private project owners may require only a performance bond, only a payment bond, or neither, depending on their preference.
How long approval takes
Established contractor, complete file — 24-48 hours. CPA-prepared financial review, current credit reports, current WIP, and the bond request on hand.
New contractor, no prior bonded work — 3-10 business days. The surety asks for additional documentation, sometimes a fronting bank line, and reviews more thoroughly.
SBA Bond Guarantee Program submission — typically adds 5-15 business days but unlocks contractors who would otherwise be declined.
Common time-killer: contractors submitting financials piecemeal. Sureties price up when information is missing or arrives over multiple emails. Submit a complete package up front: CPA review (last 3 years), interim financial if mid-year, schedule of WIP, list of completed projects with bond amounts, personal financial statements for owners 10%+, credit authorizations signed.
How to get the cheapest rate
For established contractors
Shop at least 3-4 sureties through a real surety bond agency — not your general property/casualty agent. LCMs and underwriter discretion vary 20-40% between markets on identical submissions. The carriers actively writing $1M-$10M SE contractor bonds in 2026 include Frankenmuth Insurance, Travelers Bond, CNA Surety, Merchants Bonding, Cincinnati Financial, and Auto-Owners. Each has different appetite for trade type, geography, and contractor profile.
For first-time or credit-challenged contractors
The SBA Bond Guarantee Program offers 2.4% (federal) or 2.0% (state) flat rates on bonds up to $9M ($14M federal contracts). Usually cheaper than standard market when standard market will write it, and the only path when they won't. BettrBonds is SBA-enrolled — you don't need a separate broker.