DC Money Lender Bond: A Comprehensive Guide
This guide provides information for insurance agents to help money lenders obtain DC Money Lender Bonds
At a Glance:
- Lowest Cost: $100 per year or $10 per month, based on the money lender’s credit
- Bond Amount: $5,000
- Who Needs it: All money lenders seeking to obtain a license in the District of Columbia
- Purpose: To ensure the public will receive compensation for any damages should the money lender fail to comply with licensing law
- Who Regulates Money Lenders in DC: The District of Columbia Department of Insurance, Securities, and Banking
Background
DC Statute 26-901 requires all money lenders operating in the district to obtain a license with the Department of Insurance, Securities and Banking. The DC legislature enacted the licensing laws and regulations to ensure that money lenders engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, money lenders must purchase and maintain a $5,000 surety bond to be eligible for licensure.
What is the Purpose of the DC Money Lender Bond?
DC requires money lenders to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the money lender fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the money lender breaks licensing laws.
How Can an Insurance Agent Obtain a DC Money Lender Surety Bond?
BondExchange makes obtaining a DC Money Lender Bond easy. Simply login to your account and use our keyword search to find the “money” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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Is a Credit Check Required for the DC Money Lender Bond
Surety companies will run a credit check on the owners of the money lending company to determine eligibility and pricing for the DC Money Lender bond. Owner’s with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the DC Money Lender Bond Cost?
The DC Money Lender surety bond can cost anywhere between $100 to $250 per year or $10 to $25 per month. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $5,000 bond requirement.
$5,000 Money Lender Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 600+ | $100 | $10 |
| 550 – 599 | $200 | $20 |
| 500 – 549 | $250 | $25 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
How Does DC Define “Money Lender?”
To paraphrase DC Statute 26-901, a money lender is any business who charges an annual interest rate greater than 6% on any funds loaned.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How do Money Lenders Apply for a License in DC?
Money lenders in DC must navigate several steps to secure their license. Below are the general guidelines, but license applicants should refer to the NMLS’s application guidelines for details on the process.
License Period – The DC Money Lender License expires on October 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Money lenders must purchase and maintain a $5,000 surety bond
Step 2 – Request NMLS Account
The DC Money Lender License application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.
Step 3 – Complete the Application
All DC Money Lender License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
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- Information on all bank accounts used for money lending purposes
- Company financial statements prepared within 90 days of the application date
- Company business plan
- A Certificate of Registration obtained from the DCRA
- Sample consumer loan contract
- Company formation documents
- Management chart showing the company’s hierarchy
- Ownership chart showing the company’s ownership structure
Applicants for the DC Money Lender License must pay a $500 application fee
How Do DC Money Lenders Renew Their License?
Money Lenders can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The DC Money Lender License expires on October 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the DC Money Lender License?
The District of Columbia does not require money lenders to obtain any form of liability insurance as a prerequisite to obtaining a business license. Money lenders must purchase and maintain a $5,000 surety bond.
How Do DC Money Lenders File Their Bond?
Money lenders should submit the completed bond form, including the power of attorney, electronically through the NMLS. The surety bond requires signatures from both the surety company that issues the bond and a representative from the money lending company. The surety company should include the following information on the bond form:
- License type (money lender)
- Legal name and address of entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can DC Money Lenders Do to Avoid Claims Against Their Bond?
In order to avoid claims made against their bond, money lenders in DC must follow all license regulations in the district. Including some of the most important issues below that tend to cause claims:
- Do not engage in any acts of fraud
- Follow all licensing regulations outlined here
What Other Insurance Products Can Agents Offer Money Lenders in DC?
DC does not require Money Lenders to purchase any form of liability insurance as a prerequisite to obtaining a license. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for DC Money Lender Customers?
The NMLS conveniently provides a public database to search for active money lenders in DC. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.