In the world of surety bonds, there’s a subcategory called permit bonds. This can be a confusing term at first. Most people wonder what the bond permits you to do. In most states, these types of bonds are required in relation to a business license. They are used to protect the general public from shady business owners. Therefore, acquiring a surety bond may be a necessary step to obtain your business license. Learn more about these bonds and when they’re required.
The Different Types of Bonds
Permit bonds can be issued for a variety of reasons. Certain businesses will need to get one based on the nature of their dealings. Some of the typical businesses that require these bonds include contractor agencies, collection agencies, and freight brokers. Such bonds may also be required for those working as a notary public, or for positions in the financial industry. You’ll have to refer to the requirements of your state for more specific information. It’s a good idea to research all of the bonding requirements before you open a new business.
Bonds Are Not Insurance
One thing you should understand is that a bond is different than insurance. However, it’s not uncommon that the terms are mistakenly interchanged. Being insured means that your company has been approved for a certain level of insurance coverage. Being bonded means that members of the public (clients or customers) have recourse against the business if something goes wrong. Many customers will look to see if a company has insurance, a bond, and a business license to determine if it’s a reputable organization. As stated above, bonds are also required by law in most cases.
Getting a Bond
If you need a permit type of bond, there are a few things to know. First, these bonds tend to be affordable and are offered at a set rate. Furthermore, bonds are not entirely dependent on your credit. Those with less than satisfactory credit ratings may still qualify for bonds.