If you’re a Tennessee-based contractor, you can now file a surety bond instead of CPA-reviewed or CPA-audited financial statements. The Tennessee Board for Licensing Contractors (BLC) introduced this alternative on July 1, 2026. 

Keep reading to learn:

• A breakdown of the new rule
• How bond amounts are calculated
• How to decide which option is best for your business

Why Were These Changes Introduced? 

By offering a surety bond in lieu of an audited financial statement, the BLC aims to reduce financial burden and streamline licensing for smaller contractors. 

Hiring a CPA can be expensive, especially when a contractor expects to fall short of the Board’s financial requirements. This option can speed up the application process and cut upfront licensing costs.  

Do I Need a Surety Bond?

No, not every Tennessee contractor needs a surety bond. If you don’t meet the financial requirements, you have two options for meeting the Board’s licensing standards:

• Option 1: Submit CPA-reviewed or CPA-audited financial statements. If the Board determines your financial statements aren’t sufficient, you’ll need to provide additional financial support, such as a supplemental guaranty, contractor license bond, line of credit, or other approved security.
• Option 2: File a surety bond instead of financial statements. Rather than submitting CPA-reviewed or audited financial statements, you can file a contractor license bond equal to 50% of your requested monetary limit. 

For small and mid-sized contractors who expect they won’t meet the Board’s financial requirements, filing a surety bond upfront may be the simpler and faster option.

How Does the Board Review My Finances?

The Board uses your monetary limit to determine what type of financial documentation you’re required to submit. This is the maximum dollar value you’re allowed to have on a single project, calculated based on working capital and net worth:

• Working Capital: Current assets minus current liabilities
• Net Worth: Total assets minus total liabilities

The Board uses the lower of your working capital or net worth and generally multiplies it by 10 to determine your monetary limit. It also considers factors such as your experience and license classification. 

For example, if your working capital is $75,000 and your net worth is $50,000, your monetary limit would generally be $500,000.

You cannot split a larger project into multiple smaller contracts to stay under your monetary limit.

Financial Statement Requirements

The financial documentation you’ll need depends on your monetary limit and whether you’re applying for a new license or renewing.

If you’re applying for a new license or requesting a monetary limit increase:

• Up to $3 million requested limit: CPA-reviewed or CPA-audited financial statement or surety bond 
• Over $3 million (unlimited): CPA-audited financial statement or surety bond

If you’re renewing:

• $1.5 million or less: Your own balance sheet or surety bond
• Over $1.5 million: CPA compilation or surety bond

How Do I Get a Tennessee Contractor Bond? 

If a surety bond is right for you, apply online to get a free quote within one business day. Your bond amount must be equal to 50% of your monetary limit.

Requested Monetary Limit	Bond Amount
$500,000	$250,000
$1,500,000	$750,000
$3,000,000 or more	$1,500,000

SuretyBonds.com shops its nationwide provider network to find the best available rates. After payment, you’ll receive your official bond form via email to sign and file with the BLC.

These bonds expire annually. You must maintain an active bond throughout the duration of your license, unless you choose to submit financial statements at renewal. 

How Much Will My Bond Cost?

Tennessee contractor bonds require a soft credit check to determine your exact rate. Don’t let the large bond amount discourage you — you’ll never pay the full amount upfront. Premiums start at just 1% of the bond amount for qualified applicants. 

Next Steps

If you’re applying for or renewing a contractor license, review your financial responsibility options to determine whether a surety bond can help simplify the process.

For any questions, refer to the Tennessee Board for Licensing Contractors website or call 1 (800) 308-4358 to speak with one of our surety experts.