license and permit bonds

License and Permit Bonds are a special kind of surety bond that are required before individuals can get certain business licenses. 

There are many types of License and Permit Bonds such as:

License and Permit Bonds protect consumers by guaranteeing the business follows rules and regulations. If a business fails to follow rules and regulations, someone can make a claim against the business’ License and Permit Bond.

5 License and Permit Bond Facts

#1: License and Permit Bonds do not protect you

Unlike insurance that protects the insured, License and Permit Bonds do not protect the business.

If a business wants to protect themselves, they would need to get a Fidelity Bond.

A License and Permit Bond protects other individuals. Think of a License and Permit Bond as insurance for others, paid by you.

  • If you fulfill your duties and follow the law, nothing will happen with your bond.
  • If you fail to fulfill your duties or break the law, someone can make a claim against your bond.

If the surety company has to pay out on a claim, you are responsible for repaying every penny of that claim.

This is the purpose of License and Permit Bonds: to protect the public and provide them with recourse if something goes wrong.

#2: License and Permit Bonds do not cost a fortune

License and Permit Bonds are normally set a specific bond amount.

You do not need to pay the full bond amount to get bonded. 

For example, if your profession requires you to get a $25,000 bond, you will not need to pay $25,000.

You can get most bonds for as low as 1% of the total bond amount. A $25,000 bond might only cost you $250.

Browse License and Permit Bonds. See how much you’d pay.

The rate you pay is based off your personal credit score. If you have good credit, expect to pay 1-3% of the total bond amount. If you have bad credit, expect to pay 4-15% of the total bond amount.

#3: A License and Permit Bond is not insurance

Many people confused License and Permit Bonds with insurance. They are not the same thing.

When a business says they are “Licensed, Bonded, and Insured” this means they have all three.

  • License: Met all state and local requirements and was issued a license.
  • Bonded: Evaulated by a surety company and issued a surety bond based on their credit history and work experience.
  • Insured: Evaluated by an insurance company and approved for an insurance policy.

Read more about what it means to be “Licensed, Bonded, and Insured”.

#4: There may be penalties if you practice without a bond

Can you get away with working without a License and Permit Bond for your business? The answer is definitely no.

If you operate illegally, without the required licensing, you risk facing both criminal and financial charges. Here’s news articles of people who practiced without a license and bond:

Depending on the state, you may not be required to have a license, but if you fail to follow state and federal regulations you could be facing fines of $15,000 and higher, as well as jail time of up to six months.

You also open yourself up to legal recourse from customers if anything goes wrong and you were operating without proper licensing and bonding.

#5: You don’t need great credit to get a License and Permit Bond

Just because you have had financial issues in the past or currently hold a low credit score, doesn’t mean you won’t be able to get a License Bond for your business.

A stellar credit score is going to make the process easier, but other factors are considered during the application period such as:

  • Pending or former lawsuits
  • Bankruptcy filings
  • Your past work experience and
  • Status of previous bonds you have held

If you have bad credit, you can still get bonded.

Get free bond quotes (Even with bad credit)

Do you Need a License and Permit Bond?

We are licensed in all 50 States and can quickly provide you with the most affordable License and Permit bond, regardless of your credit history. Get a free, no obligation quote now!

Browse License and Permit Bonds. See how much you’d pay.

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How to Get Your Contractor’s License in Washington

How to Get Your Contractor’s License in Oregon 

Steps to Obtaining a California Contractor License 

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