Which bond guarantees timely payment to subcontractors?

A payment bond is specifically designed to guarantee that subcontractors and suppliers are paid promptly for their work and materials provided on a construction project. This type of bond offers security to those who contribute labor and materials, ensuring that they will receive compensation even if the main contractor fails to make payments.

In contracting and construction, timely payment is crucial for maintaining cash flow and enabling subcontractors to sustain their operations. A payment bond provides a safety net that ensures that these financial obligations are met, supporting the overall stability of the project.

The other types of bonds mentioned serve different purposes. For instance, a performance bond guarantees that the contractor will fulfill the obligations of the contract, ensuring that the work is completed as specified. A bid bond is submitted with a bid to guarantee that the bidder will enter into a contract if selected, while a contract bond generally refers to a combination of performance and payment bonds but does not singularly focus on the payment aspect for subcontractors. Hence, the payment bond is uniquely tied to the timely payment issue identified in the question.