What is an Arkansas Contractor License Bond?
Contractors working in the commercial construction industry are required to obtain a license in order to work on certain projects throughout the state of Arkansas. Some residential contractors must also hold a valid license, depending on the size of the project and the jurisdiction where the work takes place. Part of the licensing requirement is securing an Arkansas contractor license bond.
A contractor bond is a form of protection put in place to ensure third parties and customers of licensed contractors have financial recourse in case the work performed is not in line with state or local codes and regulations. A surety company provides the Arkansas contractor bond to the licensed contractor, known as the principal, and an obligee is the party requiring the bond. When a successful claim is made against the bond, payment is made to the customer or third party to cover financial losses.
What Does an Arkansas Contractor License Bond Cost?
Depending on where a licensed contractor is located in the state, an Arkansas contractor license bond between $1,000 and $10,000 may be required. However, you are not responsible for paying the full bond amount. Instead, you are charged a bond premium which is a percentage of the bond you need. This bond premium ranges from 1 to 10%.
The surety company providing your Arkansas contractor license bond determines the bond premium you pay based on your personal credit history and business financials. Contractors with a low credit score will pay a higher bond premium because they pose a greater risk to the surety company.
How Do I Get an Arkansas Contractor License Bond?
Securing an Arkansas contractor license bond is not a complex process. It requires you to submit an application, often done in a few minutes online, so that a surety company can review your credit and business details. Once this information has been reviewed, you will receive a quote for your Arkansas contractor license bond and instructions on how to finalize your bonding requirement.