License and Permit Bonds and Why they are Needed?

License & Permit Bonds are meant to enforce businesses who require licenses and permits to adhere to specific guidelines set out for their industry. These bonds are typically required for construction businesses, distribution of products, manufacturing of products, and sales & service providers.

In the US, these bonds can consist of road cut bonds, motor vehicle dealer bonds, private investigator bonds, highway transportation bonds, electrical contractor bonds, consumer protection bonds, collection agency bonds, contractor’s license bonds, grain dealer bonds, and more. The primary purpose of these bonds is to protect from fraudulent activity and to protect the financial investments of other parties involved in the business.

Just like other bonds, there are 3 parties involved in these bonds: the obligee, the surety, and the principal. The party that buys these bonds is the principal, while the obligee is the State. The third party involved in License & Permit Bonds is the surety, which is the bond company that issues the bond to the principal.

The cost of a license & permit bond is similar to commercial surety bonds, however, the actual amount may vary between states. The cost is usually based on your credit score. So, if you have a higher credit score then the cost may be less than someone who has a lower credit score.

If you are looking for a good agency in your area to buy these bonds, you can also consider your online options. There are some places that will issue bonds online quickly and at competitive prices.