Illinois Loan Broker Bond: A Comprehensive Guide
This guide provides information for insurance agents to help loan brokers obtain Illinois Loan Broker Bonds
At a Glance:
- Lowest Cost: $375 per year or $38 per month, based on the applicant’s credit
- Bond Amount: $25,000
- Who Needs it: All loan brokers seeking to obtain a registration in Illinois
- Purpose: To ensure the public will receive compensation for any damages should the loan broker fail to comply with registration law
- Who Regulates Loan Brokers in Illinois: The Illinois Secretary of State
Background
Illinois statute 145.150 requires all loan brokers operating in the state to register with the Secretary of State. The Illinois legislature enacted the registration laws and regulations to ensure that loan brokers engage in ethical business practices. In order to provide financial security for the enforcement of the registration law, loan brokers must purchase and maintain a $25,000 surety bond to be eligible for registration.
What is the Purpose of the Illinois Loan Broker Bond?
Illinois requires loan brokers to purchase a surety bond as part of the application process to obtain a business registration. The bond ensures that the public will receive compensation for financial harm if the loan fails to comply with the registration regulations. In short, the bond is a type of insurance that protects the public if the loan broker breaks registration laws.
How Can an Insurance Agent Obtain an Illinois Loan Broker Surety Bond?
BondExchange makes obtaining an Illinois Loan Broker Bond easy. Simply login to your account and use our keyword search to find the “loan” 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 Illinois Loan Broker Bond?
Surety companies will run a credit check on the owners of the loan brokerage company to determine eligibility and pricing for the Illinois loan broker 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 Illinois Loan Broker Bond Cost?
The Illinois Loan Broker surety bond can cost anywhere between $375 to $1,875 per year or $38 to $188 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 $25,000 bond requirement.
$25,000 Loan Broker Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $375 | $38 |
| 650 – 799 | $500 | $50 |
| 600 – 649 | $1,000 | $100 |
| 550 – 599 | $1,875 | $188 |
*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 Illinois Define “Loan Broker?”
The Illinois Loan Broker Act of 1995 defines a loan broker as any individual or business entity who procure a loan for a borrower or assists a borrower in obtaining a loan from a third party.
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 Loan Brokers Apply for a Registration in Illinois?
Loan brokers in Illinois must navigate several steps to secure their registration. Below are the general guidelines, but applicants should refer to the registration statutes for details on the process.
Registration Period – The Illinois Loan Broker Registration expires annually and must be renewed before the expiration date
Step 1 – Establish a Business Location
Loan brokers must obtain a place of business where documents can be mailed to. A P.O. box is permissible as long as it is a legal address
Step 2 – Purchase a Surety Bond
Loan brokers must purchase and maintain a $25,000 surety bond
Step 3 – Complete the Application
All loan broker regulatory registration applications should be mailed to the following address:
Illinois Secretary of State
Securities Department
421 E. Capitol Ave., 2nd Floor
Springfield, IL 62701
Loan brokers must complete the application in its entirety, and pay the following fees:
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- $300 application fee
- $50 examination fee
- $10 registration fee
How Do Illinois Loan Brokers Renew Their Registration?
Loan brokers should mail their completed renewal application, including a $350 renewal fee, to the following address:
Illinois Secretary of State
Securities Department
421 E. Capitol Ave., 2nd Floor
Springfield, IL 62701
The Illinois Loan Broker Registration expires annually and must be renewed before the expiration date
What Are the Insurance Requirements for the Illinois Loan Broker Registration?
The State of Illinois does not require loan brokers to obtain any form of liability insurance as a prerequisite to obtaining a business registration. Loan brokers must purchase and maintain a $25,000 surety bond.
How Do Illinois Loan Brokers File Their Bond?
Loan brokers should mail the completed bond form, including the power of attorney, to the following address:
Illinois Secretary of State
Securities Department
421 E. Capitol Ave., 2nd Floor
Springfield, IL 62701
The loan broker surety bond requires signatures from both the surety company that issues the bond and the loan broker. The surety company should include the following information on the bond form:
- Legal name of entity/individual(s) buying the bond
- Surety company’s name
- Date the bond is signed and goes into effect
What Can Loan Brokers in Illinois Do to Avoid Claims Against their Bond?
To avoid claims on the Loan Broker bond, loan brokers in illinois must follow all registration regulations in the state, including some of the most important issues below that tend to cause claims:
- Do not engage in any acts of fraud
- Honor all agreements made with consumers
What Other Insurance Products Can Agents Offer Loan Brokers in Illinois?
Illinois does not require loan brokers to purchase any form of liability insurance as a prerequisite to obtaining a registration. However, most reputable brokers 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 Illinois Loan Broker Customers?
Illinois conveniently provides a public database to search for active loan brokers in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.