Tennessee Contractors License Surety Bond

Anyone desiring to be licensed as a contractor in the state of Tennessee shall make written application to the board on forms prescribed by the Tennessee Board for Licensing Contractors.  A contractor's license is required prior to contracting, bidding or otherwise negotiating a price, whenever the total cost of the project is $25,000 or more .  As part of the application, financial statements are to be provided to demonstrate the financial strength of the applicant in order to calculate the monetary limitations for the license as per Chapter 0680-01-.13 of the Rules & Regulations of the state of Tennessee. Generally, the monetary limitation placed on a classification of a license may be determined as follows: 

  • For applicants having no apparent deficiency with respect to plant or equipment, the lesser of: 
    • Ten times the applicant’s net worth; or 
    • Ten times the applicant’s working capital. (Accounts receivable that are more than three (3) months overdue may not be included within the calculation of working capital)
  • At the Board’s discretion, renewal applicants having no apparent deficiency with respect to plant or equipment, but with limited working capital, the greater of: 
    • 10 times the applicant’s working capital; or 
    • Fifty percent of the applicant’s net worth. 
  • For other applicants, a lesser amount reflecting the degree of lack of plant or equipment.

A Guaranty Agreement, line of credit, surety bond, or other indemnity may be required in addition to providing financial statements in the following situations: 

  • Applicants that have a primarily cash financial statement without fixed assets 
  • If an applicant company is completely or partly owned by a parent company then the Board may require the parent company to provide a financial statement along with a “Guaranty Agreement” in which the parent company agrees to guarantee the debts and obligations of the subsidiary company for all debts and obligations arising out of the contracting activities of the applicant. If the parent company cannot provide a “Guaranty Agreement” they may request the board to consider a TN Contractors License Bond. The bond would not be accepted in lieu of providing a financial statement.

Depending on the license monetary limit, a Tennessee Contractor’s License Surety Bond must be obtained in the amount of $500,000 (for license limits less than $1,500,000) or $1,000,000 (for license limits exceeding $1,500,000).  The conditions of the surety bond are such that if the Principal shall comply with and be subject to the provisions of Contractor’s License Law and Rules and Regulations Title 62.  The purpose of the bond is to supplement working capital and net worth; and basically provides evidence of financial solvency and security to the entity to be licensed.

Apply for your TN General Contractors Bond today!

How much does a TN Contractors License Bond cost?

The standard rate for this bond type is 1% of the bond amount.  The underwriting is based up on the creditworthiness of the applicant / owners of the business.  Additional underwriting information may be required if there are issues showing on the credit report.

How do I get a TN Contractors License Bond?

In less than 2 minutes you can complete our online application for a Tennessee General Contractors bond.  Through our automated process, we will typically provide you with a quote for your bond in less than 1 business day.  If you have questions call us at 800-737-4880 to discuss your options.

Other Contractors bonds required in TN

TN Home Improvement Contractor Bond

Metro Nashville Contractors Permit Bond (Instant Issue)

Fire Protection Sprinkler System Contractor 

Consolidated Contractors License Surety Bond - Memphis and Shelby County 

$25000 Contractors License Surety Bonds - Memphis 

Contractors License Surety Bonds - Shelby County