A Tennessee contractors license is a great achievement and certification to have. It is also required in Tennessee if you are performing work over the value of $25,000. In this article we will break down the ins and outs of how to get your TN contractors license. We will discuss the method of how to become a commercial general contractor in Tennessee. A Commercial building contractor has authorization to bid on and contract for use and occupancy by the general public for commercial use. This includes residential construction with more than four (4) units or greater than three (3) stories in height. The following items are part of the commercial Tennessee contractor license application:
- Take the NASCLA Exam
- Take the Business and Law Exam
- Exam Scores
- Financial Statement and Worksheet for Determining Monetary Limit
- Letter of Reference
- Insurance Requirements
- Statement of Experience
- Contractor’s Affidavit
- Citizenship Status
The NASCLA Exam
A great option to obtain your commercial contractor’s license in Tennessee is to start by studying for and passing the NASCLA exam. The NASCLA exam is a nationally recognized trades exam in 16 different states and the U.S. Virgin Islands. Most states will require a trades exam followed by a state specific Business and Law exam. You will need to register for the NASCLA Exam. It usually takes about 7 business days for your approval to come back. You have 1 year and 3 attempts before needing to register again. Once approved, you will register for a test time through PSI Exam.
The NASCLA exam is 125 questions (only 115 questions count). You must get at least 81 of the 115 questions correct to pass with a 70% passing score. There are 23 books on this open book exam, so knowledge of each and every book is the most important aspect of this exam. Being able to efficiently navigate the books is important on this 5-1/2-hour exam. The allotted time to complete this exam may seem like a lot, however navigating 23 books is quite time consuming. Coming prepared is a must.
With passthenasclaexam.com you have access to tutorial videos, quizzes and study guides to each book on the NASCLA exam. There are also practice final exams, with the same number of questions and time. This gives you the practice that you will need to work through the books at an appropriate pace on the exam. It will also give you knowledge of each book to be able to answer some questions on your own, without having to do a page turn in the books. Our course will dramatically decrease your study time, if you were to attempt studying on your own.
The Business and Law Exam
Just like the NASLCA Exam, the Business and Law Exam is through PSI Exam. For this exam you are tested on the “Tennessee Contractors Guide to Business, Law and Project Management” Published by NASCLA. This book can be purchased on the NASCLA website. It is 50 questions and you have 140 minutes to complete this exam. The PSI Candidate Information Bulletin is a helpful resource for preparing for this exam.
We do not offer a course or testing material for the Business and Law Exam. There are several reasons for this. The Business and Law book that is on the NASCLA exam has a lot of the same information as the Business and Law book that is on this exam. So, if you have already studied for and passed the NASCLA exam, you are well on your way to passing this exam. Also, being a single book, open book exam, we have confidence that after a few weeks of studying on your own you will be able to efficiently navigate this book.
Financial Statement
A certified licensed accountant (CPA) should review your financial statement. The CPA must be currently enrolled in a Board-approved peer review program at the time the report is issued, but may be from the state where your business resides or operates. As noted on the Tennessee Department of Commerce and Insurance page, there will be a monetary limit determination. The monetary limits are based 10 times the lesser of both working capital and net worth (plus experience). For example, a contractor with a working capital of $20,000 and a net worth of $400,000 would qualify monetarily for a limit of $200,000 ($20,000 x 10).
Reference Letter
The Letter of Reference is a requirement for all applicants. This letter is completed by a past client or employer, who will comment on your construction work and experience. You may also have a code official who has inspected your work be the reference. Please note the reference should not be from an employee or relative, but does not need to be a Tennessee resident. You only need to submit one reference letter with your application. The letter layout is part of the application PDF.
Proof of Insurance
A certificate of insurance is a requirement to apply for your Tennessee contractors license. The COI will need to include policy numbers, expiration dates, and the “Board for Licensing Contractors” with address or email address listed as the “Certificate Holder”. The COI will be an attachment to the application and the board states to not send in the COI separately.
The minimum amounts of general liability for three license levels are as follows:
- Monetary limit up to $500,000 = $100,000 of minimum coverage
- Monetary limit of $501,000 to $1,500,000 = $500,000 of minimum coverage
- Monetary limit exceeding $1,500,001 to Unlimited = $1,000,000 of minimum coverage
Workers compensation insurance is a requirement for contractors applying for a license unless the contractor does not have any employees and the contractor has met the criteria to be exempt by claiming “Handyman Exemption”. However, with the NASCLA/Business and Law strategy discussed in this article, you will be applying for a commercial contractor license. You would not fall under the “Handyman Exemption” status.
List of Experience
The List of Experience form will be part of your license application. The board uses this experience form to help determine the monetary limit and classification for the license. You may list projects performed as a prime contractor, subcontractor, or as an employee of a contractor and may include out of state projects. If you list projects in an amount that would require a license in Tennessee, you should provide an explanation to avoid delay in your application.
The Contractor’s Affidavit
In each application, the responsible party should complete the contractor’s affidavit. This is a list of questions that you must answer truthfully. Here you will note what type of entity you are. Also, if any of the owners, officers, qualifying agents, or major stockholders of the entity have been convicted of a felony. After answering the list of questions each owner, qualifying agent, partner, major officers, and controlling stock holders will need to sign this form.
Conclusion
We recommend the NASCLA and Business and Law exams if you wish to get your commercial Tennessee contractors license. This is due to the reciprocity that it has, and the possibility that it gives you to do high monetary values of work. If you wish to get your residential license, that is a different exam. However, the 9 books on the residential exam are currently all part of the 24 books on the NASCLA/Business and Law exams. So, if you can pass the NASCLA and Business and Law exam, there is a good chance you can pass the BC-A Residential Contractor exam.
Be sure to also review the Tennessee Rules and Regulations for Licensing Contractors before you start your studying or application process. Having a good understanding of all the regulations is important. It will also help you with your decision on which license is best for your.
The Tennessee contractors application may seem like a tough endeavor, it is worth the studying and organization to get started on your license. It will take focus and consistency to pass both exams and complete the application. There are so many benefits to having your Tennessee contractors license. We hope this article was able to give you a better understanding of how to obtain your Tennessee commercial contractor license. Good luck!