The North Carolina Licensing Board for General Contractors (NCLBGC) manages the process of becoming a licensed general contractor. State law requires this license for anyone who contracts to construct, superintend, or manage a construction project valued at $40,000 or more. The process ensures contractors possess the necessary competence, experience, and financial capacity to operate responsibly. Securing this license is mandatory for individuals or businesses undertaking significant construction work.
NC General Contractor License Classifications
North Carolina uses a classification system to define the type of construction work a contractor can perform. A separate limitation system defines the maximum dollar amount of a single project a contractor may legally undertake. There are three primary limitation levels based on the financial scope of the projects.
Limited License
The Limited license restricts a general contractor to a maximum contract value of $\$750,000$ for any single project. This limitation is suitable for contractors focusing on smaller or mid-sized residential and commercial projects. Obtaining this license requires the lowest financial threshold.
Intermediate License
The Intermediate license allows the holder to contract for single projects valued up to $\$1,500,000$. Contractors seeking this license typically move into larger-scale commercial or multi-unit residential developments. The financial requirements for this level are higher, reflecting the greater risk and complexity of larger contracts.
Unlimited License
The Unlimited license removes all financial restrictions on the value of a single project. This classification is necessary for businesses planning to bid on major public works, large commercial buildings, or projects exceeding the $\$1.5$ million threshold. It requires the most significant demonstration of financial stability for large-scale construction firms.
Mandatory Eligibility and Qualification Prerequisites
All applicants must be at least 18 years of age, regardless of the desired limitation level. The NCLBGC requires applicants to demonstrate good moral character, which involves consenting to a background check reviewing criminal history.
Applicants must designate a Qualified Individual, sometimes called the Responsible Managing Employee (RME). This person takes and passes the required licensing examinations on behalf of the company or individual. The qualifier’s successful examination confirms the necessary technical knowledge is present within the organization.
The application must also include three letters of reference. These letters must be no older than twelve months from the date of submission and speak to the applicant’s reputation and experience.
Proving Financial Solvency
Financial solvency requirements correlate directly with the desired license limitation. Applicants must show proof of minimum working capital or net worth to meet contractual obligations. Working capital is calculated as total current assets minus total current liabilities.
Minimum Financial Requirements
The specific financial standard varies across the three license levels:
Limited license: Working capital of at least $\$17,000$ or a total net worth of at least $\$80,000$.
Intermediate license: Minimum working capital of $\$75,000$.
Unlimited license: Minimum working capital of $\$150,000$.
Required Documentation and Surety Bonds
The documentation required to prove financial standing varies based on the license level. Limited license applicants can submit a financial statement prepared by a Certified Public Accountant (CPA) on a “Review” or “Compilation” basis. Intermediate and Unlimited applicants must typically submit an “Audited” financial statement, a more rigorous process conducted by an independent CPA.
If an applicant cannot meet the minimum working capital or net worth requirement, they may post a surety bond instead of the full financial statement. The required bond amounts are substantial: $\$175,000$ for a Limited license, $\$500,000$ for an Intermediate license, and $\$1,000,000$ for an Unlimited license.
Navigating the Application and Examination Steps
The licensing process starts with submitting the application packet to the NCLBGC, including financial statements and character references. Once the board verifies the prerequisites are met, they issue an Examination Eligibility Letter. This pre-approval is mandatory before the designated Qualified Individual can schedule the required examinations.
PSI Services administers the examinations. Candidates must pass two distinct parts: the mandatory Law and Business Management exam and a specific Trade Exam. The Law and Business Management exam covers state-specific laws, administrative procedures, lien laws, and business practices, and is required for all classifications.
The Trade Exam tests technical competency in the chosen classification, such as Building or Residential. North Carolina accepts its own Building Contractor exam or the NASCLA Accredited Examination for Commercial Building Contractors. The NASCLA option is often preferred because it is accepted by several other state licensing boards.
Both examinations are open-book, requiring a minimum passing score of 70%. The eligibility letter is valid for 120 days. A candidate who fails must wait a specified period before retesting, which requires a new eligibility notice from the board.
Post-Licensing Compliance and Insurance Requirements
After license approval, the general contractor must ensure ongoing compliance with regulatory and insurance mandates before starting work. Although the state does not universally require General Liability (GL) Insurance, local jurisdictions and project owners frequently demand it. Many commercial contracts require a minimum of $\$1$ million in commercial general liability coverage.
Workers’ Compensation Insurance is mandatory under state law for any contracting business employing three or more individuals, including corporations, partnerships, and LLCs. This coverage protects employees and the business from financial liability related to workplace injuries.
The contracting entity must also maintain an active and registered status with the North Carolina Secretary of State. Compliance includes adhering to all applicable tax and regulatory filings to ensure the business is legally structured to operate within the state.
License Maintenance and Renewal
Maintaining a valid North Carolina General Contractor license requires annual renewal. Contractors must submit the renewal application and pay associated fees to the NCLBGC before the deadline, which is typically November 30th.
Since 2021, Continuing Education (CE) has been mandated for contractors in the Building, Residential, and Unclassified license classifications. Licensed contractors must complete eight hours of CE annually to qualify for renewal. This includes a mandatory two-hour course developed by the NCLBGC covering updates to laws and regulations.
The remaining six hours can be completed through elective courses offered by board-approved providers on various industry-related topics.