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 operating within a range of regulated industries.
These bonds represent agreements made between three parties—the business owner, known as the principal; the regulating body, known as the obligee; and the bonding or surety company, known as the surety.
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 act as a financial guarantee which protects 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, thus providing their potential customers with appropriate insurance before they are allowed to legally operate.
Lance Surety Bonds offers a comprehensive range of license and permit surety bonds in all 50 states.
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Auto Broker Bond
Also referred to as the New York Auto Broker Bond, it is required by the state to ensure auto dealers abide by state regulations.
Auto Dealer Bonds
Bonds required by each state to ensure auto dealers abide by state regulations.
Most commonly used to demonstrate ownership of a vehicle when the original title is missing or incomplete.
Collection Agency Bonds
Bonds required by a governing body to ensure collection agencies operate within rules and regulations.
Contractor License Bonds
May be required by local governments for a contractor to legally operate in certain location.
Freight Broker Bonds (BMC-84)
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.
Mortgage Broker Bonds
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.
Seller of Travel Bond
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.
Agricultural Packers Bonds
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.
Appraisal Management Company Bond
Required in most states as a regulatory mechanism for appraisal management companies.
Required by the Airlines Report Commission.
Athlete Agent Surety Bonds
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.
Bad Credit Surety Bond
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 Bond
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.
Business Opportunity Seller Bond
Required by most states, this type of bond guarantees that sellers of business opportunities abide by the state’s respective laws, etc.
Business Services Bond
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.
CACFP Performance Bond
Some NGOs in Texas must post this bond before they can participate in CACFP programs.
Car Wash Bonds
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.
Check Casher Bond
Several states require providers of check cashing services to post this type of surety bond.
Citrus Fruit Dealer Bond
Citrus fruit dealers in Florida must post a bond before they can sell citrus fruits in the state.
Cigarette Tax Bonds
Cigarette distributors may be required to obtain this type of bond to ensure payment of taxes.
Consumer Finance Loan Company Bond
Required in Florida for companies that offer consumer loans.
Commercial Requester Account Bond
A bond required from California-based businesses who wish to access from the state's DMV.
Credit Services Organization (CSO) Surety Bonds
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.
Debt Consolidator Bond
Along with debt negotiator bonds, these protect debtors from fraudulent business practices by debt consolidators.
Department of Defense (DoD) Performance Bond
Also referred to as Military Freight Bonds, these types of bonds must be obtained by all transporation brokers that wish to transport DoD freight.
Designated Agent Bond
Alabama, Illinois and Mississippi are among the states requiring designated agents to get bonded prior to obtaining a license.
Detective Bond Private Investigator Bond
Also know as Private Investigator Bonds, these are required by most cities and states to protect clients receiving services from professional investigators.
Driving School Bond
A number of states require this bond as a licensing prerequisite for driving schools.
Electrical Contractor Bond
Electrical contractors in many states need this bond to get licensed. Find out more here.
Employee Company Leasing Bond
Professional employer organizations might be required to obtain this type of surety bond prior to getting licensed.
Employment Agency Bond
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.
Escrow Agency Bond
A surety bond required from escrow professionals in several states.
Escrow Officers Schedule Bond
Required from title insurance agents in Texas who wish to employ escrow officers.
Excess Weight Permit Bond
Motor carriers in some states need to get this bond before transporting excess or oversized cargo.
Fantasy Contest Operator Bond
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.
Farm Labor Contractor Bond
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.
Fertilizer Dealer Bond
A pre-licensing requirement for fertilizer dealers in Florida.
Financial Advisor Bonds (Investment Advisor & Blue Sky Bonds)
These bonds guarantee that financial advisors, investment advisors and security dealers abide by their respective state regulations that govern their licenses.
Financially Responsible Officer Bond
This bond is required from financially responsible officers (FROs) in Florida.
Foreclosure Consultant Bond
This bond is a licensing prerequisite for aspiring foreclosure consultant in several states.
Franchise and Ordinance Bond
Guarantee that those licensed to grant a privilege on a public property comply with all regulations and ordinances.
Fuel Tax Bonds
Fuel distributors may be required to obtain this type of bond to ensure payment of taxes on fuel sold in a certain location.
Grain and Commodity Bonds
State-mandated bonds that guarantee the compliance of regulations governing dealers of grain and other commodities, to include payment to producers, etc.
Health Care Clinic Surety Bond
Required by the Agency for Health Care Administration for health care facilities.
Health Club Bonds
May be required by states for health clubs to legally receive payment from customers up front.
Home Dealer Bonds
Must be obtained by home dealers to guarantee their performance with off-site built homes.
Home Improvement Bond
Required by home improvement contractors in a number of states.
Household Goods Carrier Bonds
If you want to transport household goods, several states will require you to get bonded to ensure your legal compliance.
Hunting and Fishing License Bonds
The states of Florida and New Hampshire require that a hunting/fishing license is accompanied by a surety bond.
Independent Adjuster Bond
Independent adjusters may be required to get this bond before they can get licensed. Requirements vary by state.
Immigration Consultant Bonds
Protects persons from fraud, misrepresentation or unlawful actions by an immigration consultant.
Insurance Broker Bonds
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.
Legal Document Assistant Bond
Non-lawyers in California must post this bond to become eligible to provide legal assistance services.
License & Permit Bonds
Due to the very high number of bonds nationwide that fall under this category, this link will provide general information on license & permit bonds.
Livestock Dealer Bonds
Many livestock dealers are required to post this type of surety bond, which acts as a protection to producers.
Lottery and Lotto Bonds
May be required by states to ensure that state-owned lottery machines are properly operated by store owners who have them on their property.
Medical Marijuana Bond
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.
Medicare Bonds (DMEPOS Bonds)
Surety bonds required by the Federal Government of all suppliers of DMEPOS (Durable Medical Equipment, Prosthetics, Orthotics and Suppliers).
Mileage Tax Bond
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.
Mixed Beverage Sales Tax Bond
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.
Money Transmitter Bonds
These types of bonds are required by most states to guarantee that money transmitters operate within the terms of their license.
Mortgage Lender Bonds
Required by most states to ensure that mortgage lenders, or mortgage bankers, follow all pertinent state rules and regulations.
Ocean Transportation Intermediary (OTI) Bond
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 advertising bond
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.
Patient Trust Bonds
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.
Payday Loan Bonds
Required by the state to ensure that payday loan companies follow all state rules and regulations in the operation of their business.
Personal Care Assistance (PCA) Agency Surety Bond
PCA Agency Bonds guarantee that all personal care providers comply with state statutes and rules governing PCA agencies.
Pest Control Bond
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.
Polygraph Examiner Bond
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.
Precious Metal And Gem Dealer Bonds
Some states and counties may require this bond prior to allowing precious metal and gem dealers to obtain a license or a permit.
Preneed Funeral Bonds
These types of bonds facilitate any pre-payment of funerals and burial agreements.
Process Server Bonds
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.
Professional Fundraiser Bonds
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 Adjuster Bond
Public adjusters in many states need to get licensed and bonded in order to operate legally.
Public Official Bonds
Many government officials are required to obtain public official bonds before they can be sworn in for the respective positions.
Railway Company Surety Bond
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.
Real Estate Agent/Broker Bonds
These bonds ensure that agents and brokers that handle property and funds involved with a real estate transaction are properly accounted for.
Registration Service Surety Bond
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.
Right of Way Bond
A type of permit bond required in several states from right-of-way contractors working on public roads.
Sales Tax Bonds
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.
Security Guard Agency Bond
A number of states require this bond as a prerequisite for issuing a license for security guard agencies.
Small Loan Company Bonds
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.
Sports Promoter Bonds
Promoter Bonds are required by most State Athletic Commissions of all boxing, mixed martial art, and wrestling promoters operating in the state.
Superheavy or Oversize Permit Bond
Required from superheavy or oversize motor carriers in Texas.
Surplus Lines Broker Bonds
May be required by the state government for any insurance company attempting to offer surplus lines.
Talent Agency Bond
Talent agency bonds are designed to protect the clients of talent agents and ensure high standards are upheld in the industry.
Title Agency Bonds
Required by the state of title agents operating in that state.
Third Party Administrator Bond
A bond required from third party administrators to ensure their compliance with relevant regulations when handling funds.
U.S. CUSTOMS BOND
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.
Used Car Dealer Bonds
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.
Vehicle Verifier Bonds
Bonds required from vehicle verifiers in California.
Wage & Welfare Bonds
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.
Waste Tire Hauler Bond
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.
Wrecker and Tow Operator Bond
Some cities and states may require wrecker and tow operators to get bonded as part of the process of getting licensed.
Wholesale Dealer Bond
Wholesale auto dealers are required to obtain a surety bond in most states to start their operations.
Yacht Broker Bond
Currently, California, Maryland and Florida require yacht brokers to obtain this bond prior to conducting business.
Do I Need a License and Permit Bond?
Whether you need a license and permit bond depends on the state in which you wish to open your business, the business you wish to run, and the scale at which you wish to operate.
As licensing requirements are often set by state and municipal governments, you should check with your local authority to see whether you need a license and permit bond to obtain your license. Equally, you can check our list of commercial surety bonds below to see whether your business is listed. It is important to ensure that you post the correct type of bond to meet your specific bonding requirements.
Which License Types Require a Bond?
There are many types of license which require the posting of a bond. In general, these are licenses which relate to businesses in which customers or the state are at risk of significant losses in the event of malpractice on the part of the business owner.
These include a range of business types, such as car dealers, auctioneers, companies which transport goods by sea, and the offices of public officials. This is true for sole traders, small business, and large corporations alike.
However, the exact licensing requirements are usually set at state level, or within individual municipalities, and can vary greatly across the United States. Therefore, it is sensible to check with your local government to see whether your license requires a bond.
How Much Does a License Bond Cost?
Each license bond offers protection up to a certain dollar amount, known as the total bond amount, or bond value. Total bond amounts will vary significantly, depending on the industry, the size of the business, and the state laws regarding the type of necessary 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.
The rate that applicants can expect to pay, which is a percentage of the overall bond value, generally corresponds to the applicant's credit history. The higher their credit score, the lower the rate tends to be, whereas the lower their credit score, the higher the rate tends to be. However, a poor credit score can occasionally be overlooked if evidence is given, for example, of possession of liquid assets.
Whilst the exact rates will vary between applications, applicants with average to good credit or better which is represented by a FICO score above 650, can often expect to be offered a rate between 1% and 5% of the total bond value. That means that for a bond worth $50,000, applicants might pay a premium between $500 and $2,500.
For a more specific estimate, you can apply for a free bond quote today.
Can I 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 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.
Those underwriting in the surety industry tend to designate applicants with a FICO score below 650 as “higher-risk”. These applicants with “bad credit” will often be offered a rate between 5% and 10% of the overall bond value. That means that, for a bond worth $50,000, it is common for applicants with bad credit to pay between $2,500 and $5,000.
If you are looking to apply for a surety bond, but are concerned by bad credit, you should start by applying for a free quote. Our surety experts will work to find you the best rates, no matter your credit history.
Additionally, if you still have questions, then you are always welcome to contact us on 877.515.4146, or leave us a message on our chatbot.