BEAD Program Surety Bond

Any company participating in the Broadband Equity, Access, and Deployment (BEAD) Program must have either this bond or a Letter of Credit (LoC). 

Prior to November 2023, an LoC was the only form of financial assurance accepted to participate in the BEAD Program. This was prohibitive for small internet service providers (ISPs), startups, nonprofits, and more, as LoCs require a fair amount of liquid assets and collateral. Plus, the application process is strict, making them difficult and time-consuming to obtain.

In contrast, the BEAD Program Surety Bond:

• Can be applied for with a simple online application.
• Will not tie up any assets as you pay a premium to obtain it. 
• Will decrease in price as the project progresses. 

Beyond being a more accessible form of financial assurance, this bond was also introduced to address the two situations below.

1. When the ISP (the subgrantee) can qualify for bonding and furnishes the bond directly to the state broadband office (the grantee). 
   • Who needs the bond? The ISP.
   • Who benefits? State broadband office (the obligee). They are the entity that is protected should the ISP fail to meet its award agreement obligations. 
   • What does the bond assure? The completion of the construction of the system (not other obligations that may be in the award agreement). 

2. When the contractor to the ISP that is building out the broadband system is better suited to qualify for bonding. 
   • Who needs the bond? The contractor.
   • Who benefits? The ISP and the state broadband office (considered dual obligees). They are financially protected should the contractor fail to meet its contractual obligations to the ISP.
   • What does the bond assure? The performance of the work set forth in the contract between the ISP and the contractor. 

A Bead Program Surety Bond typically costs 1% - 10% of your BEAD sub-award amount. 

However, while your initial full bond amount must be equal to 100% of the BEAD sub-award amount when work begins, this may decrease over time. The bond amount required will be reduced when you achieve deployment milestones, which, in turn, will lower your bond cost. 

Example: A company is granted a sub-award of $500,000. A surety offers them a $500,000 bond at a 2% rate — making their bond cost $10,000. When they finish 50% of their agreed-upon contracted work, their bond cost will drop 60% to $200,000. Keeping their 2% rate, their bond premium will decrease to $4,000. Reaching their next milestone will further reduce their bond cost. 

1. Apply

The Bead Program Surety Bond is a type of performance bond you can apply for using our online bond application. This application will require information such as:

• Contact information
• Project details, including contract price, timeline, and scope of work. 
• Financial information, which may include recent statements and a credit report. 

If you have questions about exactly which financial documents and information you need, don’t hesitate to contact our bond experts. We recently assisted our client, Dave, in gathering the documents he needed for a similar performance bond. 

2. Receive Your Quote

Your bond quote will be sent directly to your inbox. From there, you can log in to our website to fill out the indemnity agreement and pay your invoice. 

3. Get Bonded

An electronic copy of your bond will be issued as soon as your documents and payment process. The original bond will be sent via mail.

Choosing a BEAD Program Bond over an LoC as a form of financial assurance has many benefits. Just remember that this surety bond is needed during the application process (not after you’re approved). You must have this bond prior to entering into a subgrantee agreement. 

• This bond is required to show an applicant’s financial commitment. It acts as a financial guarantee that they will carry out work lawfully, ethically, and per the standards outlined in their work agreement. If they fail to do so, the bond covers damages caused by the bond holder’s negligence.