Contractor License or Permit Bond

Contractor License or Permit Bond Information

Contractor License Bonds are required by most states to guarantee that a general contractor will operate their business in compliance with the rules and regulations pertaining to their specific contractor license. Ultimately, these bonds exist to protect the public from fraudulent practices or from being ripped off by a contractor. All Commercial Surety offers numerous Contractor License Bonds, also referred to as CLB, programs designed to get all types of contractors approved at excellent rates, in all 50 states. It is important to understand that Contractor License Bonds are NOT the same as Bid and Performance Bonds, which is a common misconception. They guarantee the compliance with a state or local contractor’s license, where as most performance bonds guarantee that obligations of a contract are fulfilled. Frequently asked questions:

How can I become a Bonded Contractor?

First, apply for your specific bond. We have an online application where you can get a free quote. Once you obtain your bond, you’ll submit your bond along with your license application to whatever government entity is requiring you to be bonded.

How much does a Contractor License Bond cost?

Annual premium amounts are determined based on owner personal credit. Contractors with stellar credit may be eligible for standard market rates, which range from 1% to 3% of the bond amount. If the owner has a low credit score, or past due items on their credit report, annual premium typically ranges between 5% to 15% of the bond amount.

Can I get a Contractor License Bond if I have bad credit?

Yes. While many sureties only offer quotes to customers with stellar credit, we have a variety of contractor license bond programs that allows us to approve over 99% of applicants instantly through our online application. Your annual premium will depend on your individual credit profile.

Will I have to post collateral?

No. With very rare exceptions, our bond approvals do not require collateral. With our exclusive bad credit programs, we are able to offer quotes with just an annual premium requirement.

Does a Contractor License Bond guarantee a specific Contract?

No. These bonds guarantee compliance with a contractor’s state or local license. If you need a bond to guarantee performance of a specific contract, you’ll want to apply for a Contract Bond. These include Bid Bonds, Performance Bonds, Maintenance Bonds, etc. Keep in mind that underwriting criteria is stricter for contract bonds.

Will my Contractor License Bond provide coverage for multiple states?

No. You'll need to obtain a separate surety bond for each state that you plan on conducting business in. However, be sure to check with each state during the licensing process as some do not have this particular bond requirement.

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Three party agreement

Surety Bond Definition: The definition of a surety bond is as follows: A surety bond is a binding agreement between three parties. This agreement sets forth a financial guarantee by one party ( “surety” ) to another party ( “obligee” ) that a third party ( “principal” ) will fulfill required obligations to the obligee, and that state, federal, and local laws and applicable regulations will be adhered to. Let’s examine each of the three parties.

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Bad Credit – Fast Approvals – Lowest Rates Available.

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  • Credit below 650 and/or have blemishes on credit report.
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Average cost is 5-15% of the bond amount.
  • Available for all commercial bonds.

Why does credit matter? Applying for a surety bond is similar to applying for a loan. You are asking a surety company to back you financially. Reviewing credit is the best method for the surety to understand their risk. All sureties review credit as a view only and should have no effect on your credit score. While it is true that bad credit makes it harder to obtain a competitive quote, we are committed to making sure all of our customers have access to the best possible rates. While we can’t guarantee that we can provide a bond for the most extreme bad credit situations, we strive to make sure no stone is unturned! In other words, if you are insurable, we will get it written. Contact us today and let us put together an online quote for you that will exceed your expectations.