Short answer
Many license requirements let you either post a surety bond or deposit the full amount in cash with the regulator. A bond costs only a premium, a fraction of the amount, and keeps your capital free, while a cash deposit ties up the entire sum. The bond is usually the cheaper way to satisfy the same requirement.
When a state sets a financial security requirement, it often accepts either form. A cash deposit means handing the regulator the full required amount, which then sits unavailable to your business, sometimes for years. A surety bond satisfies the same requirement for a premium that is a small percentage of the amount.
The trade-off is that a bond comes with underwriting and indemnity, while a cash deposit does not. For most businesses, keeping working capital available makes the bond the practical choice.
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