How long does it take to get bonded as a contractor in Ontario?

For established contractors with clean financials, a bonding facility can be set up in one to four weeks. First-time applicants should allow four to eight weeks. Some surety companies offer express programs with same-day approval for projects under $500,000 to $1,000,000.

What financial statements do I need to get a surety bond?

Sureties typically require two to three years of financial statements prepared by a CPA. For smaller bond programs (under $1 million), a review engagement may suffice. For larger programs, audited financial statements are usually required. You will also need a current work-in-progress schedule and interim financial statements.

Can a new contractor with no history get bonded?

Yes, but your personal financial strength and industry experience matter more for new companies. Sureties evaluate the owner's resume, trade certifications, banking relationships, and personal net worth. Starting with smaller contracts and building a track record of on-time, on-budget completion is the fastest path to increasing your bonding capacity.

How much does a surety bond cost for a contractor?

Contract bond premiums in Canada typically range from 1% to 3% of the contract value. A $500,000 performance and payment bond package might cost $5,000 to $10,000. Rates improve as your bonding history and financial position strengthen.

Surety Bonding

How to Get Bonded as a Contractor in Ontario: A Step-by-Step Guide

By Rob RoughleyJuly 8, 20257 min read

Getting bonded is the single most important step a growing contractor can take. Without bonding, you are locked out of every public construction project over $500,000 in Ontario and most large private contracts. With it, you gain access to a pipeline of work that unbonded competitors simply cannot reach.

The process is not as complicated as most contractors expect. Here is exactly what you need, what sureties look for, and how to build your bonding capacity from your first project forward.

Why Bonding Matters for Ontario Contractors

Ontario's Construction Act (Section 85.1) requires surety bonds on all public construction contracts at or above $500,000. The project owner must receive a performance bond and a labour and material payment bond, each for a minimum of 50% of the contract value.

That means every municipal road project, school renovation, hospital expansion, and government building in Ontario requires the contractor to be bonded. Private owners increasingly require bonds as well, especially on larger commercial and institutional projects.

Beyond the legal requirement, being bondable signals financial health and professional credibility. Sureties conduct the same due diligence a bank would before extending credit. When a project owner sees that a surety has underwritten your company, it tells them a third party has verified your financial stability, management capability, and track record.

The Three Cs: What Sureties Evaluate

Every surety underwriter in Canada evaluates contractors on the same three criteria, known as the three Cs:

Character

This is about you and your management team. Sureties look at your personal and professional reputation, years of industry experience, trade certifications, and references from owners, subcontractors, and suppliers. They want to see that you pay your bills on time, complete projects as promised, and operate with integrity.

For first-time applicants, the owner's personal resume and industry background carry significant weight. A contractor with 15 years as a project manager who starts their own company has a stronger character profile than someone entering the industry cold.

Capacity

Can your company actually execute the work? Sureties evaluate your equipment, workforce, project management systems, and track record of completing similar projects on time and on budget. They review your work-in-progress (WIP) schedule to understand your current commitments and whether you have the bandwidth to take on additional contracts.

Capacity also means technical capability. A surety will not bond a residential framing contractor for a $5 million commercial concrete project, regardless of their financial strength. You need demonstrated experience in the type and scale of work you are bidding.

Capital

This is the financial foundation. Sureties analyze your balance sheet, income statement, working capital, net worth, and banking relationships. Key metrics include:

Working capital (current assets minus current liabilities) — your ability to fund operations between progress payments
Net worth — the equity cushion that absorbs losses
Debt-to-equity ratio — how leveraged the company is
Banking relationships — an established line of credit demonstrates lender confidence
Accounts receivable and payable — the pace at which you collect and pay

A general guideline: your single project bonding limit is typically 10 to 15 times your working capital, and your aggregate bonding limit is 15 to 25 times working capital. These ratios vary by surety and by contractor profile.

What You Need to Apply

Your surety broker will guide you through the application, but here is what to prepare:

Financial documents:

Two to three years of CPA-prepared financial statements (review engagement minimum for smaller programs, audit for larger)
Current interim financial statements (within the last six months)
Work-in-progress schedule showing all active and upcoming projects
Bank reference letter confirming your line of credit and account standing
Personal financial statement for each owner holding 10% or more equity

Company information:

Contractor's questionnaire (your surety broker will provide this)
Organizational chart with key personnel and their resumes
List of completed projects from the past three to five years (with contract values, owners, and completion dates)
References from project owners, subcontractors, and suppliers

Legal documents:

Certificate of incorporation or business registration
WSIB clearance certificate
Current CGL insurance certificate

The General Indemnity Agreement

Before any bond is issued, every principal (and typically their spouse, if applicable) must sign a General Indemnity Agreement (GIA). This is the most important document in the surety relationship.

The GIA states that if the surety has to pay a claim on your bond, you are personally obligated to reimburse them. Unlike insurance, where the insurer absorbs the loss, a surety bond is a guarantee backed by your personal and corporate assets. This indemnity obligation is why surety loss ratios are so low (typically under 25%) compared to insurance (70-75%).

Understand what you are signing. The GIA is not a formality — it is a legally enforceable personal guarantee.

Building Bonding Capacity Over Time

Most contractors start with a modest bonding facility and grow it over time. Here is how:

Start small and execute well. Complete your first bonded projects on time, on budget, and with clean subcontractor payments. Each successful project strengthens your track record with the surety.

Reinvest in the business. Sureties reward growing equity. Retained earnings that stay in the company increase your net worth and working capital, which directly increases your bonding limits.

Maintain clean financials. Pay your subcontractors and suppliers promptly. A surety's worst nightmare is a contractor who stretches payables — it signals cash flow problems and increases payment bond risk.

Communicate proactively. If a project hits trouble, tell your surety broker early. Sureties are far more willing to work with contractors who raise issues in advance than those who wait until a default notice arrives.

Upgrade your financial reporting. Moving from review engagement to audited financial statements signals maturity and often unlocks higher bonding limits. The cost of an audit (typically $10,000 to $25,000 annually) pays for itself many times over in increased bonding capacity.

Express Bond Programs

For smaller contractors bidding on projects under $500,000 to $1,000,000, several Canadian sureties offer express or quick-bond programs. These streamlined applications require less documentation and can be approved in as little as 24 to 48 hours. They are designed to get new contractors into the bonded market without the full underwriting process required for larger facilities.

Your surety broker can advise which express programs match your situation and help you transition to a full facility as your company grows.

Why You Need a Surety Broker

Surety bonding is a specialty. Not every insurance broker handles it, and the ones who do well have deep relationships with surety companies and understand construction industry financials.

A good surety broker does more than submit your application. They:

Present your company in the strongest possible light to the surety
Match you with the right surety — each company has different appetites for contractor size, trade, and geography
Advise on financial structuring — how to position your balance sheet for maximum bonding capacity
Advocate during claims — if a bond claim arises, your broker represents your interests

At Roughley, surety bonding is one of our specialties. We work with contractors from their first $100,000 project through multi-million dollar programs, and we have the surety relationships to place bonds efficiently across the Canadian market.

Getting Started

If you are ready to get bonded or want to increase your existing bonding capacity, start with a conversation. We will review your financials, assess your current position, and map out the path to the bonding program your business needs.