Which bond guarantees that funds will be available to pay subcontractors and suppliers according to the contract?

The bond that guarantees funds will be available to pay subcontractors and suppliers according to the contract is known as a payment bond. This type of bond is specifically designed to protect the interests of those who provide labor or materials for a construction project. In essence, if the contractor fails to pay subcontractors or suppliers, the payment bond ensures that the surety will step in to fulfill those financial obligations.

This is crucial for maintaining the financial health of the construction industry, as it helps ensure that all parties involved in the project are compensated for their work and resources supplied. By securing a payment bond, the contractor demonstrates their commitment to honoring payment obligations, which can facilitate smoother project execution and foster trust among all parties.

The other types of bonds mentioned serve different purposes. A bid bond is intended to assure that a contractor will enter into a contract if awarded a project, while a performance bond guarantees that the contractor will fulfill the terms of the contract as specified. A surety bond is a broader term that encompasses various types of bonds, including bid bonds, performance bonds, and payment bonds, but it is not specific to the payment obligations for subcontractors and suppliers.