What is an Electronic Bond or e-bond?

Many government contracts, especially ones for construction projects, will require vendors to provide surety bonds, there are two types of bonds required a performance bond and a payment bond. Bonds are a way for suppliers to prove to buyers that they have access to adequate up-front funding to begin, complete, and pay for the costs surrounding a project. An electronic bond, or e-bond, is simply verified electronic proof of the bond from a surety company or bank.

Bond guarantee

Bonds provide a guarantee to the government agency awarding the contract, that the work will be performed based on the terms and conditions, sub-contractors will get paid, and the contract will be completed. Bonds are usually issued by banks or surety companies, who act as financial backers to the suppliers requesting the bond.

The SBA and other associations provide bond surety guidance to small businesses to show them what to expect when obtaining a bond. They also have a group of authorized surety companies that can help your business if acquiring an e-bond for the first time.

e-Bond Certificate & Seal

In the past, bonds were required to be provided in physical form by the bank or surety companies to the government agency by way of the supplier. Now, with bidding platforms and electronic bidding, bonds can be provided digitally, saving the supplier time and expenses associated with acquiring a paper bond.

An e-bond can simply be attached as part of their response and a buyer can view the validity of the bond directly online. To obtain an e-bond, a supplier makes a request to a bank or surety company to provide the e-bond certificate with an electronic seal. Once received, the supplier provides this digitally sealed certificate to the buyer along with other needed documents. 

Now that we live in the digital world, by allowing suppliers to provide e-bonds has simplified an important step of the contract process.

E-bonding is now a highly preferred solution for suppliers and buying agencies because it makes for an easier way to submit and verify that suppliers have the resources needed to complete the work they are contractually obligated to deliver.