Louisiana Loan Broker Bond: A Comprehensive Guide

May 21, 2021

Louisiana Loan Broker Bond

This guide provides information for insurance agents to help their customers obtain Louisiana Loan Broker Bonds

At a Glance:

  • Average Cost: Between $125 to $1,250  per year based on the applicant’s credit
  • Bond Amount: $25,000
  • Who Needs it: All loan brokers operating in Louisiana
  • Purpose: To ensure the public will receive compensation for any damages should the loan broker fail to comply with licensing law
  • Who Regulates Loan Brokers in Louisiana: The Louisiana Office of Financial Institutions

Background

Louisiana statute 3572.2 requires all loan brokers operating in the state to obtain a license with the Office of Financial Institutions. The Louisiana legislature enacted the licensing laws and regulations to ensure that loan brokers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, loan brokers must purchase and maintain a $25,000 surety bond to be eligible for licensure.

What is the Purpose of the Louisiana Loan Broker Bond?

Louisiana requires loan brokers 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 loan broker fails to comply with the licensing regulations set forth in Louisiana statute 3572.8. Specifically, the bond protects the public in the event the loan broker breaches any legally binding contracts. In short, the bond is a type of insurance that protects the public if the loan broker breaks licensing laws.

Louisiana Loan Broker Bond Form

Louisiana Loan Broker Bond Form

How Can an Insurance Agent Obtain a Louisiana Loan Broker Surety Bond?

BondExchange makes obtaining a Louisiana 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? Enroll 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.

Is a Credit Check Required for the Louisiana Loan Broker Bond?

Surety companies will run a credit check on the owner’s of the loan brokerage company to determine eligibility and pricing for the Louisiana Loan Broker bond. Owners 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 Louisiana Loan Broker Bond Cost?

The Louisiana Loan Broker surety bond can cost anywhere between $125 to $1,250 per year. 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 a $25,000 bond requirement.

$25,000 Loan Broker Bond Cost

Credit Score Bond Cost (1 year)
700+ $125
650 – 699 $250
625 – 649 $313
600 – 624 $470
550 – 599 $1,000
500 – 549 $1,250

*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 Louisiana Define “Loan Broker?”

Louisiana statute 3572.1 defines a loan broker as any individual or business entity who obtains or offers to obtain a consumer loan for a third party on behalf of a borrower.

How do Loan Brokers Apply for a License in Louisiana?

Loan brokers in Louisiana must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the application form for details on the process.

License Period – The Louisiana Loan Broker License expires on January 1 of each year and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

Loan brokers must purchase and maintain a $25,000 surety bond

Step 2 – Complete the Application

All regulatory loan broker license applications must be mailed to the following address:

Office of Financial Institutions
Non-Depository Division
Post Office Box 94095
Baton Rouge, Louisiana 70804-9095

Loan brokers must complete the application in its entirety, and submit the following items:

    • $500 license fee
    • $100 fee for each verified employee broker
    • Employee verification form for each broker employed by the company
    • Authority to obtain information from outside sources form for all employed brokers and company owners with a 10% state or higher
    • Company formation documents
    • Sample loan application
    • Copy of the company’s loan brokerage agreement and disclosure statement
    • Company financial statements
    • Affirmative agreement
    • Agent of service of process acceptance

How Do Louisiana Loan Brokers Renew Their License?

Loan brokers should mail their completed renewal application, including the $500 application fee plus a $100 fee for each broker, to the following address:

Office of Financial Institutions
Non-Depository Division
Post Office Box 94095
Baton Rouge, Louisiana 70804-9095

The Louisiana Loan Broker License expires on January 1 of each year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Louisiana Loan Broker License?

The State of Louisiana does not require loan brokers to obtain any form of liability insurance as a prerequisite to obtaining a business license. Loan brokers must purchase and maintain a $25,000 surety bond.

How Do Louisiana Loan Brokers File Their Bond?

Loan brokers should mail the completed bond form, including the power of attorney, to the following address:

Office of Financial Institutions
Non-Depository Division
Post Office Box 94095
Baton Rouge, Louisiana 70804-9095

The loan broker surety bond requires signatures from both the surety company that issues the bond and a representative from the loan brokerage firm. The surety company should include the following information on the bond form:

  • Legal name and address of entity/individual(s) buying the bond
  • Surety company’s name and address
  • Date the bond is signed

What Can Louisiana Loan Brokers Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, loan brokers in Louisiana must follow all license 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 legally binding contracts

What Other Insurance Products Can Agents Offer Loan Brokers in Louisiana?

Louisiana does not require loan brokers 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 Louisiana Loan Broker Customers?

Louisiana 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.

2021-12-28T15:20:30-05:00