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.
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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.
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.