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What is a License and Permit Bond?
License and permit bonds are a type of surety bond, sometimes referred to as ‘commercial bonds’ or simply ‘license bonds’. Whatever you call them, license and permit bonds are required by government agencies as a pre-licensing requirement for a number of different businesses.
A license and permit bond guarantees that a business will operate in accordance with federal, state, or local laws and regulations. Each license bond is specific to one industry, and protects customers and/or the state from damages. Most commonly, license bonds protect governments and consumers from fraudulent practices committed by the business that is bonded. In any industry that requires bonding, each business must be licensed and bonded before they are allowed to legally operate.
Lance Surety Bonds offers all types of license bonds in all 50 states.
Find your License Bond
Bonds required by each state to ensure auto dealers abide by state regulations.
Bonds required by a governing body to ensure collection agencies operate within rules and regulations.
May be required by local governments for a contractor to legally operate in certain location.
Freight Broker Surety Bonds (BMC-84) are necessary for operation as a transportation broker, and are a requirement of the Federal Motor Carrier Safety Administration (FMCSA).
Also known as Liquor Tax Bond, these bonds are required by the federal and state government in order to manufacture, sell, ship or warehouse alcoholic beverages. They guarantee the payment of taxes collected on liquor and other alcoholic beverage sales.
Bonds that are required by many states to ensure that mortgage brokers operate in accordance with all pertinent rules and regulations of that particular state.
These types of bonds guarantee that funds collected by sellers of travel are promptly sent to the appropriate individuals.
These types of bonds are required by the state to ensure that telemarketers, or phone solicitors, follow all rules and regulations set forth by that particular state in the conduct of their solicitation.
Required by the U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration (GIPSA) of agricultural packers, market agencies and dealers in order to protect fair trade practices, financial integrity, etc.
Required in most states as a regulatory mechanism for appraisal management companies.
Required by the Airlines Report Commission.
Required in several states as a licensing step for athlete agents.
Guarantee that auctioneers follow all state regulations governing their license. Protect people from any damages that may be caused by fraud or misrepresentation by an auctioneer.
These are not a specific type of license and permit bond, but instead are programs offered for most of the commercial bonds available in the market. They are designed for applicants considered to be “high risk”, due to bad credit scores, or no credit in the case of some start-ups.
Blue sky bonds are intended to protect the public from fraud related to investment and/or the purchase of securities.
A brewers surety bond, also known as TTB bond, is a type of alcohol tax bond which is required to legally operate a brewery.
The different types of Broker Bonds available are Freight Broker, Insurance Broker and Mortgage Broker Bonds.
Required by most states, this type of bond guarantees that sellers of business opportunities abide by the state’s respective laws, etc.
These types of bonds are not always mandatory. A business can choose to get bonded for their own protection against certain fraudulent actions their employees might commit.
Some NGOs in Texas must post this bond before they can participate in CACFP programs.
Currently required in California and New York City. These bonds ensure that car wash employees receive all earned wages, interest and fringe benefits in a timely manner.
Several states require providers of check cashing services to post this type of surety bond.
Citrus fruit dealers in Florida must post a bond before they can sell citrus fruits in the state.
Cigarette distributors may be required to obtain this type of bond to ensure payment of taxes.
A bond required from California-based businesses who wish to access from the state's DMV.
The Credit Services Organization Surety Bond is a form of protection for buyers of various credit services and it guarantees that CSOs comply with all applicable state regulations.
Along with debt negotiator bonds, these protect debtors from fraudulent business practices by debt consolidators.
Also referred to as Military Freight Bonds, these types of bonds must be obtained by all transporation brokers that wish to transport DoD freight.
Alabama, Illinois and Mississippi are among the states requiring designated agents to get bonded prior to obtaining a license.
Also know as Private Investigator Bonds, these are required by most cities and states to protect clients receiving services from professional investigators.
A number of states require this bond as a licensing prerequisite for driving schools.
Electrical contractors in many states need this bond to get licensed. Find out more here.
Professional employer organizations might be required to obtain this type of surety bond prior to getting licensed.
Employement agency in several states are required to provide this type of surety bond as a protection to the people they provide employment opportunities on behalf of.
A surety bond required from escrow professionals in several states.
Required from title insurance agents in Texas who wish to employ escrow officers.
Motor carriers in some states need to get this bond before transporting excess or oversized cargo.
A growing number of states is enacting fantasy sports legislation and including a surety bond requirement for operators in order to protect the interests of fantasy sports players.
This surety bond is a pre-licensing requirement in many states. It protects the public as well as the contractor's clients from unlawful or fraudulent actions.
A pre-licensing requirement for fertilizer dealers in Florida.
These bonds guarantee that financial advisors, investment advisors and security dealers abide by their respective state regulations that govern their licenses.
This bond is required from financially responsible officers (FROs) in Florida.
This bond is a licensing prerequisite for aspiring foreclosure consultant in several states.
Guarantee that those licensed to grant a privilege on a public property comply with all regulations and ordinances.
Fuel distributors may be required to obtain this type of bond to ensure payment of taxes on fuel sold in a certain location.
State-mandated bonds that guarantee the compliance of regulations governing dealers of grain and other commodities, to include payment to producers, etc.
May be required by states for health clubs to legally receive payment from customers up front.
Must be obtained by home dealers to guarantee their performance with off-site built homes.
Required by home improvement contractors in a number of states.
If you want to transport household goods, several states will require you to get bonded to ensure your legal compliance.
The states of Florida and New Hampshire require that a hunting/fishing license is accompanied by a surety bond.
Independent adjusters may be required to get this bond before they can get licensed. Requirements vary by state.
Protects persons from fraud, misrepresentation or unlawful actions by an immigration consultant.
May be required by a state department to ensure that insurance brokers within the state abide by all rules and regulations, and to guarantee their performance.
Non-lawyers in California must post this bond to become eligible to provide legal assistance services.
Due to the very high number of bonds nationwide that fall under this category, this link will provide general information on license & permit bonds.
Many livestock dealers are required to post this type of surety bond, which acts as a protection to producers.
May be required by states to ensure that state-owned lottery machines are properly operated by store owners who have them on their property.
A Medical Marijuana Surety (MMJ) Bond is a type of sales tax bond. It is part of the licensing requirements to open a medical marijuana dispensary.
Surety bonds required by the Federal Government of all suppliers of DMEPOS (Durable Medical Equipment, Prosthetics, Orthotics and Suppliers).
Closely associated with Highway Use Bonds, these guarantee the payment of taxes to the state for truck mileage.
This link will provide information on commercial bond types that are not listed here. Due to the very high number of commercial bonds available in the current market, many are too specific to fall under one of the main categories.
Producers and sellers of mixed beverages in states such as Texas and Oklahoma are required to get bonded to guarantee timely payment of sales tax to the relevant state authority.
These types of bonds are required by most states to guarantee that money transmitters operate within the terms of their license.
Required by most states to ensure that mortgage lenders, or mortgage bankers, follow all pertinent state rules and regulations.
Required by the Federal Maritime Commission of all ocean freight forwarders and non-vessel operating common carriers (NVOCC) doing business in the U.S.
Outdoor advertisers in several states need this bond before they get a permit. The bond guarantees compliance with local regulations on the installation, maintenance and removal of advertising signs.
These types of bonds help prevent the misuse of any funds by a caretaker given in a patient’s trust.
Pawnshop owners in some states are required to get bonded. The bond acts as guarantee for the property pawned by customers.
Required by the state to ensure that payday loan companies follow all state rules and regulations in the operation of their business.
PCA Agency Bonds guarantee that all personal care providers comply with state statutes and rules governing PCA agencies.
A bond ensuring the proper use of pesticides by authorized businesses and individuals.
A bond required in over 15 states from wholesale distributors of prescription and non-prescription drugs.
A type of bond required from plumbers in a number of locations across the U.S.
Some states require that polygraph examiners be licensed and post this bond as a pre-requisite. Examiners conducting services under the Employee Polygraph Protection Act of 1988 are also subject to a bonding requirement.
Some states and counties may require this bond prior to allowing precious metal and gem dealers to obtain a license or a permit.
These types of bonds facilitate any pre-payment of funerals and burial agreements.
Guarantee that process servers follow rules governing service of process (legal notice, court papers). Process servers must deliver court documents to a party in accordance with regulations.
Closely related to Commercial Co-Venturer Bonds, these guarantee that any professionals hired to conduct fundraisers on behalf of charitable organizations do not mismanage or misplace such funds.
Public adjusters in many states need to get licensed and bonded in order to operate legally.
The Kansas City Southern Railway Company and the Texas Burlington Northern Santa Fe (BNSF) Railway Company require this bond to ensure that railroad transporters who use their infrastructure comply with applicable regulations.
These bonds ensure that agents and brokers that handle property and funds involved with a real estate transaction are properly accounted for.
Registration service providers in some states are required to post this bond to ensure that they abide by the law when registering vehicles on behalf of third parties.
A type of permit bond required in several states from right-of-way contractors working on public roads.
Required by the government to ensure timely payment of sales tax by a company.
State mandated bonds for a wide array of schools that guarantee the protection of the contractual and statutory rights of students.
A number of states require this bond as a prerequisite for issuing a license for security guard agencies.
Also known as Licensed Lender Bonds, these bonds must be obtained by small loan lenders in order to provide protection to consumers from illegal lending activities.
Promoter Bonds are required by most State Athletic Commissions of all boxing, mixed martial art, and wrestling promoters operating in the state.
Required from superheavy or oversize motor carriers in Texas.
May be required by the state government for any insurance company attempting to offer surplus lines.
Talent agency bonds are designed to protect the clients of talent agents and ensure high standards are upheld in the industry.
Required by the state of title agents operating in that state.
A bond required from third party administrators to ensure their compliance with relevant regulations when handling funds.
Required by U.S. Customs & Border Protection of all importers of goods into the United States. Guarantees payment of taxes and compliance of all rules and regulations governing imports.
Bonds required by state departments to ensure used car dealers are operating in accordance with regulation, in order to protect customers.
Bonds required to ensure utility bills are paid in a timely manner.
Bonds required from vehicle verifiers in California.
These types of bonds guarantee payment of dues to local unions.
This bond type ensures that warehouse operators properly store and handle goods and commodities stored in their warehouse.
This bond is required in multiple states to ensure that waste tire haulers comply with state regulations on transporting, storing and disposing of waste tires.
Some cities and states may require wrecker and tow operators to get bonded as part of the process of getting licensed.
Wholesale auto dealers are required to obtain a surety bond in most states to start their operations.
Currently, California, Maryland and Florida require yacht brokers to obtain this bond prior to conducting business.
How Much Does a License Bond Cost?
Each license bond offers protection up to a certain dollar amount, known as the total bond amount. Total bond amounts will vary largely, depending on the industry, the size of the business, and the state which requires the bond.
Premiums– or what the bonded entity must pay to get a license bond– also vary based on several factors. The most important factor is the applicant’s credit score. A premium is a certain percentage of the total bond amount required, calculated on a case-by-case basis. Here’s one example, using the cost of a contractor license bond in California.
Surety bond name
North Carolina Auto Dealer Bond
Premium With Good Credit (above 650)
$500 - $1,500
Total bond amount required
Premium With Bad Credit (below 650)
$2,500 - $5,000
To make sure you fully understand how license bond prices are determined, make sure to
read our page dedicated to surety bond costs
Can You Get a License and Permit Bond with Bad Credit?
Sureties treat an applicant’s credit score as the most important piece of information when calculating their premiums. Personal credit score is so important, that there are whole groups of surety bonds– such as
contract bonds– which are impossible to get with bad credit. Fortunately, this is not the case for most types of license and permit bonds, and for the vast majority of applicants. It does mean, however, that business owners with spotty credit histories will pay slightly higher premiums. Lance Surety Bonds has an excellent Bad Credit Surety Bonds Program, which can help you stay in business despite your credit issues.