How to Get a Contractors License In Arkansas

Published: Mar 13, 2018
Arkansas contractors licensing guide

 

To perform commercial or residential construction work in Arkansas over a certain dollar amount, you must obtain a license from the Arkansas Contractors Licensing Board. To obtain a license, you will need to comply with several pre-licensing requirements.

These include providing proof of a certain amount of net worth, passing a test, as well as obtaining a contractor license bond.

See below for a detailed explanation of the licensing process for contractors in Arkansas!

License Types

There are two general license classifications for contractors in Arkansas – a commercial license and a residential license. These are further subdivided into specific classifications. Depending on the classification you choose, requirements for getting licensed may vary slightly.

Commercial licenses

Commercial licenses can be either restricted (permitting work on projects up to $750,000 that are not limited to but include materials and labor) or full licenses that permit work on any type of commercial project.

Commercial licenses are further broken down into a number of classifications which the applicant must choose from. These are:

  1. Heavy Construction
  2. Municipal & Utility
  3. Highway, Railroad & Airport
  4. Building (Commercial & Residential)
  5. Light Building (Commercial & Residential)
  6. Mechanical (an additional trade license or certification is required for this license type)
  7. Electrical (an additional trade license or certification is required for this license type)
  8. Specialties (certain specialties may also require a trade license or certification)

Contractors licensed in one of the classifications between 1-7 can also perform any specialties associated with their classification. Contractors who have a specialty license can only perform the functions of that specific specialty.

According to The Rules and Regulations of the Contractors Licensing and Bond Law, to apply for any of the above licenses, you need to have at least 5 years of experience in the type of work you wish to perform!

Residential licenses

Residential licenses in Arkansas are issued by the Arkansas Residential Committee. If you have a Building or Light Building Commercial License you are also allowed to perform residential projects. You can also apply for a particular residential license in one of the below categories:

  • Residential Builder’s License
  • Residential Remodeler’s License
    • Limited (projects up to $50,000)
    • Unlimited (projects of any size)
  • Home Improvement Specialty License
    • Limited (projects up to $50,000)
    • Unlimited (projects of any size)

According to the Rules & Regulations of the Residential Contractors Committee, to apply for a residential builder’s license, you need to have at least 4 years of experience in the building industry. To apply for a residential remodeler’s license, you need at least 2 years of experience.

Once you have chosen the license type you wish to apply for you can proceed with completing the application and licensing requirements.

Requirements for Getting an Arkansas Contractors License

Application and pre-licensing requirements for commercial and residential licenses vary slightly. See below for a list of requirements you need to complete and comply with before you can apply for your license and get approved.

Commercial license requirements

To get a commercial contractor license (both restricted and full) in Arkansas you need to fulfill the following requirements:

  • Complete the license application
  • Submit three references from individuals who can verify you have the necessary experience to obtain the license classification (reference forms are included in the application form)
  • Pass the Arkansas Business and Law test and provide a copy of your test score in the application (find out more on p. 19 and 20 of the application form)
  • Submit a “Compiled” financial statement from an independent CPA, if you are applying for a restricted license, or a “Reviewed” or “Audited” financial statement if you are applying for a full license
  • Fulfill the minimum net worth requirement for your classification – for new applicants 1/2 of the net worth must be in the form of cash in the bank
    • $50,000 net worth for Heavy construction, Highway, railroad & airport, Municipal & utility, and Building classifications
    • $20,000 net worth for Light building, Mechanical, and Electrical classifications
    • $5,000 net worth for all specialty classifications
  • Copy of your filings/articles if applying as a corporation, LLC or LP
  • Provide proof of Worker’s Compensation Insurance, if you have one or more employees
  • Pay a $100 nonrefundable application fee
  • Submit a $10,000 contractor license surety bond

Applications must be submitted to the Licensing Board at least three weeks prior to a board meeting, in order to be reviewed and approved. Once the Board reviews your application, and if you have fulfilled all the necessary requirements, your license will be issued.

Residential license requirements

Application requirements for residential licenses are similar in many ways to those for commercial licenses. Here is a full list of what you need to provide when applying for one of the residential licenses:

  • Complete the license application for Builders, Remodelers or Home improvement specialty
  • Provide three references that verify you have the necessary experience to obtain the license classification (reference forms are included in the application form); Home improvement license applicants can provide such references but are not required to – a separate page for providing proof of experience is included in their application form
  • Provide a current compiled balance sheet less than one year old, showing positive net worth – applies to Builder and Unlimited Remodeler and Home Improvement applicants
  • Pass the Arkansas Business and Law test and provide a copy of your test score – applies to Builder and Remodeler license applicants
  • Provide a copy of your filings/articles if applying as a corporation, LLC or LP or complete the relevant affidavit in your application form
  • Provide proof of Worker’s Compensation Insurance, if you have one or more employees
  • Pay a $100 (for Builders) and $50 (for Remodelers and Home Improvement) nonrefundable application fee

As with commercial licenses, applications for these licenses must be posted to the Arkansas Residential Committee three weeks prior to a committee meeting to be reviewed at that meeting.

If you are applying for a commercial license, you may wonder why you need to submit a surety bond, and how you can obtain one. See below for more information about the Arkansas contractors license bond.

Surety Bond Requirements

Applicants for a commercial contractors license in Arkansas must obtain a $10,000 surety bond as financial security before they are issued their license. According to the bond form, the bond is conditioned on the contractor’s compliance with the Arkansas State Licensing Law for Contractors.

The bond’s function as financial security is to guarantee that if a bonded and licensed contractor does not comply with the conditions of the bond, and thereby causes any losses or damages, compensation may be sought by the Contractors Board. Such compensation can be as high as the full amount of the bond. Typically, when a claim is made against a bond, the surety will compensate claimants in the amount determined by the Board or a court, and the contractor must then reimburse the surety in full.

The cost of getting bonded is not the same as the bond amount though. To get bonded, you must pay a bond premium, which is typically a small percentage of the full bond amount. The exact rate of your premium depends on your personal credit score and other financial which the surety will review prior to offering you a rate on your bond. Applicants with high credit scores can often get bonded for as little as 1% of the total amount of this bond. So, if you are offered a rate of 1.5% on your bond, the cost of your bond will be $150. 

For an exact quote on your bond, complete our bond form and we will get in touch with you shortly!

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Victor Lance is the founder and president of Lance Surety Bond Associates, Inc. He began his career as an officer in the U.S. Marine Corps, serving two combat tours. As president of Lance Surety, he now focuses on educating and assisting small businesses throughout the country with various license and bond requirements. Victor graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan's Ross School of Business.

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