Bonds 101

Bonds are required by certain governmental entities to allow various types of activities to take place in their jurisdictions. These types of specialty bonds. While this is a comprehensive list of the various types of miscellaneous or specialty bonds, it is no way exhaustive:

Itinerant Vendor Bond or Peddler Bond

These are required in many jurisdictions if you are soliciting businesses in a specific municipality or you are selling goods from a non permanent location. The requirements for these types of bonds vary from place to place. In order to save time, you should request a link to the website that states the requirements or an email with the forms or requirements. It is also important to find out if each individual needs a separate bond or they will accept a bond in the name of the company that covers all employees engaged in the regulated activity.

Street Opening Bond or Driveway Permit

These bonds can be required by the State or a City if you are doing any work on a public way. The most common of these are adding a driveway, connecting to sewers and/or water mains and sidewalk work. These bonds are very specific. The amount of the bond is usually based upon the size of job and the size of the bond is set by entity requesting the bond. The cost of these is generally 3% of the required bond amount. It can take 1 to 2 business days after a completed application to get these bonds. In most instances these require good credit.

Developer Bonds

These are required if you are going to be doing any type of work that requires building on undeveloped land. These bonds are not the easiest bonds to get as they require the bond company to complete the proposed development if the party obtaining the bond does not complete the work. The cost of a developer bond is around 3% of the amount the bond that is required. The amount of these bonds are assessed on a case by case basis. All these types of bonds will require good credit of the party requesting these bonds.

Alcohol Tax Bonds or Liquor Tax Bonds

If you are making or selling alcohol, you will need a bond.  You will be required to get a federal tax bond and in most cases a State alcohol tax bond. The amount of the bond required is determined by the amount and type of alcohol  you produce. These bonds are usually a couple of hundred dollars a year.

Out of State Contractors Bond

This type of bond is required by some States if your business is not based in that State.  The out of State contractor guarantees to the State that the company will pay all taxes due to the State from the contractors operation in that State. These taxes are use, sales tax, employment taxes and any income taxes. These bonds are generally expensive as the possibility of a claim on the bond is higher than in most situations. The cost of these is around 10% of the bond required. These bonds also require good credit.

How Do I Get a Bond?

In most instances, the cost of required  bonds varies by the amount of the bond required and the risk that the Surety company has on paying any claims on the bond. The cost of bonds varies from State to State as a result of different State laws. In most cases there is no credit check for miscellaneous  bonds, except as outlined above. If there is a credit check required, the price difference for people with good credit versus those with bad credit is staggering.  In certain States some companies do not require a credit check to issue these type of bonds, so it is always best to check with the professionals at for a free quote. Good credit as defined by most bonding companies is a credit score above 700, no bankruptcy in last 7 years and no unresolved claims against previously issued bonds.

Another major concern that contractors have about getting a bond is how long will it take to get processed. In all situations where the contractors credit is “good” as defined above or no credit check is required the bonds can be issued immediately. These permit bonds are in most cases electronically sealed and can be emailed directly to the contractor for their signature. In some cases, an actual signature and seal is required from the Bond company and in that case, the bond can be delivered the next day by Fedex or regular mail if time allows. can take a check or credit card over the phone to collect payment for the permit bond.

If you have any other questions that were not answered here or any bonding questions in general please call Thomas Hester of UnitedSuretyBonds.Com at 312-878-2372 or e-mail at TOM@FARMERBROWN.COM.