Surety companies have a greater interest to issue lien bonds when they have already provided a performance bond on that project. The reason being, is that the placing of a mechanics lien stops the flow of payments from a project owner and increases the likelihood of a performance bond claim because without any payments flowing, work will likely cease on the project.
However, if there is no performance bond in place it can make securing a lien bond more difficult. As such, the requirement for one of the following pieces of collateral is more likely:
Collateral Mortgage
Cash Security with the Surety Company
Letter of Credit provided to the Surety Company
Lastly – if the lien bond is required on a project where a performance bond has not been issued the likelihood of a rate closer to 3% would also increase.