What’s a payment bond?
Another type of bond is a payment bond. In contrast, payment bonds are required of contractors to guarantee payments for materials and to subcontractors, as well as ensuring the project finishes with no liens against it. As with performance bonds, payment bond requirements are set by the project owner.
Your business and reputation could end up in serious jeopardy if you violate your contract and bring a claim against your bond. And, as with all surety bonds, you will ultimately have to pay the amount of any claims.