Tennessee is one of the top three states experiencing job migration—people are flocking to the state for jobs. Tennessee is number three behind Virginia and Texas (October 2024), and with that comes a demand for contractors. To work as a contractor in Tennessee requires a license and a rather lengthy application.
Tennessee classifies projects based on costs. Projects between $3,000 and $25,000 are considered general home improvement work and require a home improvement license. Projects over $25,000 require a prime contractor license. The process to become licensed includes an application, paying fees, and passing an exam.
Tennessee offers several different contractor’s licenses, such as building, electrical, mechanical, and municipal utility. You can also obtain specialty licenses in fields including landscaping, excavation, cell towers, and solar panels.
Here we’ll guide you through the licensing process to work in Tennessee.
Job Outlook for Licensed Contractors in Tennessee
The construction industry in the U.S. is expected to grow 5.6% (2024). In Tennessee employment in the industry grew 8.5% from February 2020 to August 2024. The median income for all construction occupations in Tennessee was $43,820 in 2023; however, general contractors earn between $40,177 and $119,099, with an average salary of $69,174.
There are a lot of opportunities within the industry for motivated contractors. Becoming a contractor only requires three years of experience, passing a business and trade exam, completing the application, and paying the licensing fees.
Types of Contractor Licenses in Tennessee
In most counties, licenses are required for any project valued over $3,000; although, the type of license and requirements to obtain the license are quite different. Projects valued between $3,000 and $25,000 are considered home improvement and require a home improvement license—even if you’re the homeowner. This license is required in Bradley, Davidson, Haywood, Hamilton, Knox, Marion, Robertson, Rutherford, and Shelby counties.
The home improvement license includes projects to repair, replace, alter, convert, improve, or modernize existing structures. These licenses do not cover electrical, plumbing, or HVAC. There are no HVAC licenses for projects under $25,000.
For projects valued over $25,000, a contractor’s license is required when acting as a prime contractor, or someone contracting directly with the owner, subcontractors such as electricians, roofing contractors, and plumbers, or construction managers.
There are several trade exams offered, each leading to a specific license, including:
- Combined Residential, Commercial, and Industrial Building (BC):
- Residential Building (BC-A)
- Commercial building (BC-C)
- Small Commercial (BC-b(sm) - Projects valued less than $750,000
- Industrial building (BC-C)
- Commercial and Industrial (BC-B,C)
- Electrical (CE)
- Mechanical (CMC) - Plumbing and HVAC; must be pre-approved with three years of experience
- Plumbing (CMA-A) - Must be pre-approved with three years of experience
- HVAC (CMC-C)
- Fire Sprinkler (CMC-D) - Must also obtain licenses as a Firm and Registered Managing Employee from the Division of Fire Protection.
- Masonry (LMC) - Only for projects exceeding $100,000 in value
Contractors can also qualify for limited licenses. For example, electricians or plumbers working on projects valued under $25,000. Local jurisdictions may require licenses, and in some cases, licenses are issued by different state boards, such as the Alarm Systems Contractors Board. Additionally, qualifying agents (QA) may take the exams on behalf of an entity or employer. A QA can also be the homeowner.
It’s important to check with the state and local jurisdictions to ensure you get the right license.
Steps to Become a Licensed Contractor in Tennessee
The application process can be lengthy and may require an interview before the Tennessee Department of Commerce and Insurance Board, but the end result is a viable career in the construction industry.
Here are the steps to becoming licensed in Tennessee:
Step 1: Determining the Correct License Type and Taking the Trade Exam
The first step to becoming licensed is to determine the correct license type based on project value, jurisdiction, and the work you will be performing. The list is extensive, so it is best to check with the state to ensure you’re getting the most up-to-date and accurate information. In some cases, you will be required to obtain licensing from local jurisdictions or different state boards.
The two-part exam includes Business and Law and Trade components. Each part requires a $55 fee. The Business and Law exam is required by all applicants. The 50-question exam is open book and requires a 73% to pass. Licensees have 140 minutes to complete the test. The NASCLA Contractors Guide to Business, Law, and Project Management is used and most testing preparation courses offer this book as part of their exam prep.
The trade exam depends on your specialty. The state waives this exam requirement in several states with reciprocity agreements. Trade exams have 100 questions, require a 73% to pass, and allow 300 minutes to complete.
Step 2: Financial Statement
Tennessee requires a reviewed or audited financial statement prepared by a Certified Public Accountant (CPA) or a Licensed Public Accountant (LPA) depending on the monetary value of the business. Contractors are assigned monetary limits on their licenses based on working capital and net worth.
Step 3: Letter of Reference and Proof of Insurance
One letter of reference is required from a past client or employer attesting to your construction work and experience (three years). Proof of general liability insurance is required based on the monetary limit on your license. Worker’s compensation or a waiver is also required.
Step 4: Corporations, LLCs, etc.
You are required to file your business status with the Tennessee Secretary of State and show proof on your application.
Step 5: Complete the Contractor’s Affidavit
A notarized affidavit is required attesting that you do not have any complaints, convictions, or violations. If you do, an explanation and interview are required.
Step 6: Submit the Application and Fee
The board meets every mother month: January, March, May, July, September, and November. Applications are due before the 20th of the month prior to the board meeting. The fee to apply is $250.
Step 7: Board Approval
A board interview is required unless specifically waived. The interview is informal and takes less than 30 minutes. Anyone applying for a restricted license, does not have the minimum three years of experience, or has a felony conviction or complaint against them must interview.
Interview waivers are granted if the application is complete and in order.
Step 8: Licensed Issued
Licenses are issued only after the board meets. Your license and license ID number, classification, monetary limit, and expiration date will be mailed to you.
Conclusion
There are a lot of hoops to jump through before beginning your career as a licensed contractor in Tennessee, but the end result is a rewarding and profitable career.
The Contractor Training Center can help with exam prep, applying for a license, and consulting on building your contractor career. We’re here to support you along your journey and build a customized plan to help you get licensed based on your expertise and career goals.