Texas Contractor Bonds & Surety

Texas does not have a statewide general contractor license — so there is no statewide contractor license bond requirement. Instead, Texas bonds are mostly transaction-specific. Dallas requires contractor registration with a fee (no bond), Austin requires a one-time registration (no bond), and Houston has no general contractor registration program. Electricians license through TDLR, which requires electrical contractors to carry liability insurance; plumbers license through the Texas State Board of Plumbing Examiners. A contractor bidding public works posts bid, performance, and payment bonds under the Texas Little Miller Act (Texas Government Code Chapter 2253). This patchwork makes Texas uniquely transaction-driven compared with California, Arizona, or Nevada, where a single state license bond covers most work.

Houston, Dallas, and Austin do not require a general contractor registration bond. Houston has no general contractor registration or bond program — trade contractors register separately. Dallas requires registration with a fee under City Code Chapter 52, with no bond and no city general liability minimum. Austin requires a one-time contractor registration and states no insurance minimum and no bond. San Antonio runs its own contractor registration through Development Services; confirm any bond requirement directly with the city. Separate bonds can still apply to specific permits (such as right-of-way work) and to public works under Government Code Chapter 2253.

The Texas Little Miller Act is codified at Texas Government Code Chapter 2253. It mandates surety bonds on public works contracts with any Texas governmental entity — including state agencies, counties, municipalities, school districts, and special districts. A performance bond equal to 100% of the contract price is required for public works contracts over $100,000. A payment bond equal to 100% of the contract price is required for public works contracts over $25,000 ($50,000 for municipalities). These bonds protect both the public owner (performance) and subcontractors and suppliers (payment). TxDOT projects have additional requirements layered on top of Chapter 2253.

Texas contractor bond premiums depend on bond type, face amount, and the contractor's credit. Small permit and license bonds (such as right-of-way bonds some cities require) are typically priced at a small percentage of the penal sum, depending on credit. Bid bonds for public works typically cost 1–3% of the bond amount. Performance and payment bonds run 0.6–3% of the contract amount, with the best rates reserved for contractors with strong personal credit, audited financial statements, and a track record of completed bonded work.

Yes. Most small Texas permit and license bonds can be issued for contractors with credit scores as low as 550, though the premium rate will be higher — often 3–5% of face value instead of 1%. Performance and payment bonds for public works are more credit-sensitive because the surety is guaranteeing contract completion, not just a fixed penal sum. Contractors with scores below 650 can still qualify through specialty markets, collateral programs, SBA bond guarantee programs, and funds-control arrangements. We place bonds across 30+ surety carriers to find the right home for every credit profile.

A bid bond (typically 5% of the bid amount on Texas public works) guarantees that if you win the contract, you will sign it and post the required performance and payment bonds. A performance bond (100% of the contract) guarantees you will complete the project according to plans, specifications, and schedule — if you default, the surety either finishes the work or pays the owner the cost to complete. A payment bond (100% of the contract) guarantees your subcontractors, laborers, and suppliers get paid, protecting them from your nonpayment and protecting the public owner from lien-equivalent claims. On most Texas public projects, all three are required in sequence.

Generally not as a license bond. TDLR requires electrical contractors to carry liability insurance. Plumbers are licensed by the Texas State Board of Plumbing Examiners (TSBPE), not TDLR, and irrigators by TCEQ. HVAC contractors licensed under TDLR's air conditioning and refrigeration program have their own requirements. Some cities may require permit-specific bonds, so check with the city before you bid.

Most small Texas contractor bonds — permit and license bonds and small bid bonds — can be issued the same business day for contractors with credit scores above 650. We collect basic information (business name, owner SSN for credit pull, bond form from the obligee), run the underwriting, and email the signed and sealed bond within 2–4 hours. Larger performance and payment bonds over $500,000 typically require 2–5 business days for underwriting review of financial statements, work-in-progress schedules, and bank references. Contractors with prior bonded-job history and a standing surety relationship can often bind larger bonds within 24 hours.