What You Should Know About License & Permit Bonds
License & permit bonds are types of surety bonds that are required for many businesses. Several federal, state, and local government agencies require these bonds when issuing a business its license.
Here are some important things to know about bonds:
They are not insurance
Many people confuse a bond with insurance. Both must be bought by an issuing company. In fact, there are insurance companies that sell bonds. However, the two are not the same:a license is granted by the authorities when a business meets specified conditions. A bond is meant to protect the interests of the public or the consumer, while insurance protects the buyer. If an incident happens, the business will be penalized the bond amount. However, with insurance, the business can claim for the damages.
They do not cost a fortune
Bonds are not expensive. This is because you only pay a fraction of the cost. If you have a good credit score, you may be required to pay as little as 1%.
You can get a bond with poor credit
If you do not have a good credit score, many surety companies will work with you to issue your license & permit bonds. The surety company will consider factors such as bankruptcy filings, pending lawsuits, work history, and performance with other bonds. You may, however, have to pay more as bonds for low credit typically cost more.