Surety Bond Education

What is a Supply Bond?

A Supply Bond is a type of contract surety bond. Specifically it is used to guarantee a contract for supply of materials.  For example, a construction project may require purchase of components that are high-dollar, specialized, and/or critical to completion of the project.  A Supply bond could help manage the financial risk of not getting your delivery on time or at all.

Is a Supply Bond Different Than A Payment & Performance Bond?

Unlike a Performance bond, which would include labor exposure and execution of construction, a supply bond guarantees delivery of materials or equipment from point A to point B and receipt on a particular date specified in the contract.

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When is a Supply Bond Used?

If you’re building a home, you probably wouldn’t ask the lumber yard down the road for a Supply bond on the lumber delivery.  However, we’ve seen some interesting cases such as use of a Supply Bond to guarantee delivery of turbines associated with construction of a hydroelectric dam.  You can imagine how critical it was to ensure delivery of this very expensive and critical equipment in a timely manner.  Of course there are many applications where a Supply bond can be a solid way to reduce risk.

Please contact us at Schmalz & Associates to help or complete our online application here.  We can help with all of your Supply Bond needs in Texas.  You may email Eric Schmalz at or by calling 512-640-6444

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