License & Permit Bonds are required by a state or municipal body when granting licenses to practice a specific activity or business. The bond ensures that the purchasing party will follow the rules and regulations of the state and imposes penalties for failure to comply. In cases of misconduct or fraud, a complaint can be levied against the bond.<\/p>\n
There are many types of License & Permit Bonds. Some of these bonds include:<\/p>\n
\u2022 Mortgage Bonds
\n\u2022 Auto Dealer Bonds
\n\u2022 Contractor License Bonds
\n\u2022 Airline Reporting Bond
\n\u2022 Auctioneer Bond
\n\u2022 Contractor License Bond
\n\u2022 Notary Bond
\n\u2022 Collection Agency Bonds<\/p>\n
Like all surety bonds, there are three parties in a License & Permit Bond:<\/p>\n
Principal: This is the business, agency or organization, buying the bond. The bond is usually required for the issuance a permit or license.<\/p>\n
Surety: This is the company selling the bond, usually an insurance company or a bonding agency.<\/p>\n
Obligee: The party requesting the bond. In this case, the federal, state or municipal licensing authority.<\/p>\n
When applying for License & Permit Bonds<\/p>\n
A bond agency will consider certain factors before issuing a bond. These factors include:
\n\u2022 The financial stability of the business and its partners.
\n\u2022 The credit score of the business partners.
\n\u2022 Any past issues — such as outstanding loans — against the business.<\/p>\n
Some facts about License & Permit Bonds:<\/p>\n
\u2022 A business may need to apply for multiple licenses if operating in different areas. A bond applies to only a specific activity or field. For instance, a car dealer agency must buy the Auto Dealer Bond in order to operate. If the company expands into offering loans, it must apply for mortgage bonds as well.<\/p>\n
\u2022 The purpose of the bond is to protect the public. While an insurances policy is bought to protect a person\u2019s interests, a surety bond, such as the License & Permit Bond, is intended to protect the general public against any misuse by the principal. In this way, it is critical for the principal to follow the rules and regulations of the industry or face punitive action.<\/p>\n