Bonding capacity

Definition

What a surety will bond at once, and the per-job ceiling one state prints on every license.

Why It Matters

Three instruments get blurred here and they behave differently. The license bond is a fixed penal sum protecting the state and consumers, four thousand dollars for a Washington electrical contractor and capped there for the life of the bond, so it says nothing about capacity. Performance bonds on public work create the demand for capacity, because federal construction contracts require them above one hundred fifty thousand dollars and the states write their own versions. Capacity itself is a surety's private judgment, with one exception worth knowing before an offer. Nevada's board sets a monetary limit on every license, the largest contract the holder may take on one site for one client. It adds a cap on all open contracts combined only for a residential applicant unlicensed in the past two years or a licensee facing formal discipline, and where either applies the ceiling is a public fact. None of it travels with the business, because the limit is measured again against the new owner's balance sheet.