When looking to hire a contractor you should always check to see if they are bonded. Such surety bonds are created to demonstrate the contractor’s credibility as well as to guarantee the performance of the work. Should the contractor default upon the contract, the surety is required to pay a penal sum up to an agreed-upon maximum, to the project owner. This amount is an important factor in assessing risk to the surety, and thus influences the premium charged to the contractor for the bond. In many cases, the Small Business Administration may also act in partnership with selected surety companies to reimburse the surety for losses resulting from a contractor’s default on a guaranteed bond. This reduces risk to the surety and thus the premium to the contractor. It could well be worthwhile to explore this option.