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Arkansas Contractor License Bonds

What is an Arkansas Contractor License Bond?

Arkansas requires commercial contractors and roofing contractors to purchase a surety bond before your license can be issued. Plus there's an optional bond if you don't want to submit a financial statement.

This surety bond, called a contractor license bond, is a type of insurance contract required by the Arkansas Contractors License Board before they will issue you a license. A contractor license bond is a a financial guarantee that you'll follow all Arkansas building codes and regulations, plus follow through on your contracting obligations to your customers and subcontractors.

When you purchase a contractor license surety bond, you're making this promise to the Alaska Division of Corporations, Business, and Professional Licensing and to your customers.

Get Your Arkansas Contractor Bond

Commercial Contractor's License Bond

$10,000 Bond

1-Year Bond

Residential Roofing Registration Bond

$15,000 Bond

Contractor Bond (In Lieu of Financial Statement)
Contractor License Bond - Filed with City, County or Other Local Government

Bonds up to $25,000

1-Year Bond Starts at $100.00
1.0%-1.8% of the Bond Amount

2-Year Bond Starts at $175.00
1.0%-1.8% of the Bond Amount

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Who Is Required To Purchase an Arkansas Contractor Contractor Bond?

Arkansas has 5 primary license classifications:

  • Commercial license
  • Residential builders license
  • Residential remodelers license
  • Residential roofers license
  • Home improvement license

Arkansas only requires commercial contractors and roofing contractors to purchase a contractor bond.

If you're applying for the temporary commercial license, you must also purchase a surety bond independent from the main commercial license bond.

If you're wondering why only these two classifications require a bond, it's because commercial contractors take on the largest projects, worth the most money, and responsibility.

When a specialized contractor, like a roofer, is required to purchase a bond, it's usually because there have been a large number of complaints filed in the past causing the Board to take action for the protection of consumers.

The Arkansas Contractor License Bond Amounts

Arkansas has a set bond amount for commercial and roofing contractors.

License Classification Bond Amount Click to Get a Quote
Commercial Contractor $10,000 Click to Purchase Now
Roofing Contractor $15,000 Click to Get a Quote

The Required Commercial Financial Statement

Every commercial classification and specialty classification has a net-worth requirement. For example, the Building classification has a $50,000 net-worth requirement.

The Arkansas Contractors License Board requires 50% of the net-worth amount to be held as cash in a bank account at all times.

If you can't meet this requirement or you elect not to tie up this amount of capital, you can purchase a Surety Bond in Lieu of the Financial Statement.

The amounts of this bond depend on the license classification you are applying for:

License Classification Bond Amount
Heavy Classification $500,000
Highway, Railroad, Airport, Classification $500,000
Municipal & Utility Classification $500,000
Building Classification $500,000
Light Building Classification $200,000
Mechanical Classification $200,000
Electrical Classification $200,000
Specialty Classification $50,000

These bond amounts are set by the Arkansas Contractor License Board. This amount is not the price of the bond.

The amount is the maximum coverage available to customers and subcontractors of a contractor in the event they fall victim to purposeful misconduct or fraud by the contractor.

How Much Does an Arkansas Contractor Bond Cost?

The price of Arkansas contractor bonds vary based on the type of bond required and is determined by a rate quoted by a surety.

A surety is an insurance company that underwrites the surety bond. And like any insurance company, the rates they charge are based on their own internal assessment, typically taking into consideration these three factors:

  • Personal credit
  • Contracting experience and industry experience
  • Any prior bond claims if you've been licensed in the past

And like we mentioned, sureties will assess complaints across the state for any given license classification.

The rates each surety quotes will vary compared to other sureties.

And because rates vary, the final prices can vary too. Specialized surety agencies like Surety Bonds Direct help customers save hundreds of dollars purchasing a contractor bond.

We use our network of A rated sureties to price shop for you and find you the lowest possible price.

Commercial Contractor Bond Price

For the $10,000 commercial contractor bond we offer a low fixed price with no credit check.

License Classification Bond Amount Click to Get a Quote
Commercial Contractor $10,000 Click to Purchase Now

Residential Roofing Bond Price

Again, the bond amount for Residential Roofers is $15,000. This bond requires a custom rate from the surety.

The table below shows example pricing from really good rates to average rates.

License Classification Bond Amount Click to Get a Quote
Roofing Contractor $15,000 Click to Get a Quote

Bond In Lieu of Financial Statement

This bond requires a customized rate from a surety. Remember, this is why working with Surety Bonds Direct is a great idea. We'll work hard to get you the lowest possible rate on the market.

Let's look at the Heavy classification bond amount ($500,000). The example rates below are from really good to average. From our bond specialist's experience, the sureties tend to always quite these similar rates for this bond.

Bond Amount Surety Bond Rate Price
$500,000 0.8% $4,000
$500,000 1.0% $5,000
$500,000 1.5% $7,500

Why is an Arkansas Contractor Bond Required?

The Arkansas Contractors License Board requires all individuals and businesses to obtain a contractor license in order to perform contracting services in the state.

This license process ensures each contractors has:

  • A minimum level of experience
  • Obtained the necessary level of education
  • The proper business records are submitted
  • Ensure the proper insurance policies are purchased and in place

And in the case of Commercial and Residential Roofing contractors, the contractor license bond is one of those required insurance policies you must purchase before the Board will issue an active license.

What Does an Arkansas Contractor Bond Protect Against?

The contractor bond (even the Surety Bond in Lieu of Financial Statement) is a type of insurance for the protection of the contractor's customers and hired subcontractors.

Unfortunately, there will always be a few licensed contractors who purposefully make poor decisions to increase profits, financially harming their customers.

These fraudulent actions of misconduct include:

  • Breaking the terms of a construction project
  • Never finishing projects
  • Taking deposits or down payments and never starting or completing a project
  • Replacing agreed upon materials with cheaper alternatives to increase profits
  • Fail to pay subcontractors for completed work
  • Altering contracts or overcharging for changes

If a contractor is found guilty of any of these actions, a claim can be made against the contractor license bond for financial repayment.

Remember the amount of coverage only extends to the bond amount.

What Happens After You Purchase Your Bond?

After you purchase your bond, Surety Bonds Direct's issuing department will prepare your bond with the correct signatures, seals, and the required power of attorney so the Contractors License Board is guaranteed to accept your bond, or your money back.

Arkansas allows us to email the bond to you. This makes it easy for you to submit the bond directly to the Board.

Remember, you can get your application approved before you submit the surety bond requirement, but don't let the bond be the reason for a delay in having your license issued.

Get this done!

Renewing Your Contractor Bond

Arkansas contractor bonds expire one year from the active (effective) date of your bond.

Your bond specialist will reach out to you 30 to 45 days in advance of your renewal date to make paying the renewal premium easy.

Once you pay the renewal premium, your bond remains active.

This Contractor License Bond is Continuous

A continuous bond means the original bond remains active as long as you pay the renewal premium.

Most of the time, you never have to worry about having a new bond issued or submitting a new bond back to the Board.

If we find you lower pricing during bond renewal, we'll secure you the lower priced bond. In this case you will have to submit the bond to the Board so they know you're still actively bonded.

Contractor Bonds And Getting Your Arkansas Business License/Registration

If this is the first time you're applying for a Commercial contractor license or a Residential Roofer license, read our blog post outlining the steps to get your Commercial General Contracting license in Arkansas.

At a high level the steps are:

  1. Get your application fees and other payments together
  2. Collect 3 references to prove experience and expertise
  3. Purchase your contractor bond or bonds if you need the Bond in Lieu of Financial Statement
  4. Pass the Arkansas Business and Law exam
  5. Prepare your financial statement
  6. Organize your business filings and any required workers compensation insurance
  7. Submit your application on time for Board review