Bonding Letter
All ProvincesSurety Bonding Letter / Bond Certificate
Issued by Surety Company
Valid for 1 year (or project-specific)
What is Bonding Letter?
A Bonding Letter (also called a surety letter or bond certificate) is issued by a surety company confirming a construction company's bonding capacity and status. Surety bonds — including bid bonds, performance bonds, and labour and material payment bonds — provide a financial guarantee that the contractor will fulfill their contractual obligations. The bonding letter confirms the company's ability to obtain these bonds and specifies the maximum single project and aggregate bonding limits.
Construction companies bidding on government contracts, large private projects, or public infrastructure work typically need bonding. Most Canadian government construction contracts above a certain threshold require bid bonds (guaranteeing the contractor will honor their bid) and performance bonds (guaranteeing project completion). Even on private projects, sophisticated owners often require bonding for risk management. A bonding letter from a recognized surety demonstrates the company's financial stability and project capacity.
Why Expiration Tracking Matters
Bonding letters are typically issued for a specific period or project and reflect the company's financial position at the time of issue. As the company's financial situation changes — taking on new projects, completing others, or experiencing financial shifts — the bonding capacity may change. An outdated bonding letter may overstate or understate the company's current capacity, which can cause issues during prequalification or contract award.
Provincial Requirements & Regulations
Federal and provincial government contracts in Canada commonly require surety bonds. The federal government typically requires bid bonds (10% of contract value) and performance bonds (50% of contract value) on construction contracts. Provincial requirements vary but follow similar patterns. The Surety Association of Canada sets industry standards for bonding practices. Private sector bonding requirements depend on the project owner and contract terms.
Renewal Process
Bonding letters should be updated annually or whenever the company's financial position materially changes. The surety company evaluates the contractor's financial statements, work history, management capability, and existing project commitments to determine bonding capacity. Companies should work with their surety broker to maintain current documentation and request updated letters before prequalification deadlines.
Common Mistakes to Avoid
- Not maintaining an up-to-date bonding letter for prequalification — some opportunities have tight submission deadlines
- Overcommitting bonding capacity across multiple projects, leaving insufficient room for new bids
- Not providing updated financial statements to the surety company, which can reduce bonding limits
- Assuming bonding is only for government work — many large private projects also require bonds
How WorkSitePass Helps You Manage Bonding Letter
WorkSitePass stores your Bonding Letter alongside all other company credentials. Track the letter's validity period, receive alerts when it's time to request an update from your surety company, and present proof of bonding capacity instantly during prequalification.
Issuing Authority
Contact
Your surety brokerFrequently Asked Questions
A bonding letter is a document from a surety company confirming your construction company's ability to obtain surety bonds (bid bonds, performance bonds, etc.) and your maximum bonding capacity.
Not all, but any company bidding on government contracts or large private projects will likely need bonding. Government contracts above certain thresholds typically require bid and performance bonds.
Surety companies evaluate your financial statements, work history, management experience, and current project commitments. Strong financials, a track record of successful projects, and experienced management increase bonding capacity.
A bid bond guarantees you'll honor your bid if awarded the contract (typically 10% of bid value). A performance bond guarantees you'll complete the project according to contract terms (typically 50% of contract value).
Start Tracking Your Bonding Letter Certificate Today
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