Maine Loan Broker Bond: A Comprehensive Guide
June 17, 2021
This guide provides information for insurance agents to help their customers obtain Maine Loan Broker Bonds
*This article focuses solely on the requirements for the $25,000 Maine loan broker bond, To learn about the $10,000 Maine Refund Anticipation Loan Broker Bond, click here
At a Glance:
- Average Cost: Between $188 to $1,250 per year based on the applicant’s credit
- Bond Amount: $25,000
- Who Needs it: All loan brokers operating in Maine
- 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 Maine: The Maine Bureau of Consumer Credit Protection
Maine statute 10-201 requires all loan brokers operating in the state to obtain a license with the Bureau of Consumer Credit Protection. The Maine 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 Maine Loan Broker Bond?
Maine 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 regulations set forth in Maine statutes 10-101 to 10-401. Specifically, the bond protects the public in the event the loan broker engages in any acts of fraud or fails to honor contractual obligations made with consumers. In short, the bond is a type of insurance that protects the public if the loan broker breaks licensing laws.
How Can an Insurance Agent Obtain a Maine Loan Broker Surety Bond?
BondExchange makes obtaining a Maine 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 Maine 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 Maine 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 Maine Loan Broker Bond Cost?
The Maine Loan Broker bond can cost anywhere between $188 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 the $25,000 bond requirement.
$25,000 Loan Broker Bond Cost
|Credit Score||Bond Cost (1 year)|
|650 – 699||$250|
|625 – 649||$313|
|600 – 624||$470|
|550 – 599||$1,000|
|450 – 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 Maine Define “Loan Broker?”
Maine statute 10-102 defines a loan broker as any business entity who provides one or more of the following services:
- Improves a consumer’s credit record, history or rating
- Arranges for or obtains an extension of credit for a consumer
- Serves as a facilitator of a refund anticipation loan or refund anticipation check
Exemptions to this definition include:
- Supervised financial institutions/lenders and all their employees/affiliates
- Individuals licensed by the Real Estate Commission
- Individuals admitted to practice law in Maine
- Non-profit organizations
- Consumer reporting agencies
How do Loan Brokers Apply for a License in Maine?
Loan brokers in Maine must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.
License Period – The Maine Loan Broker License expires on July 31 of even numbered years (2022, 2024 etc) 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 – Hire a Qualifying Individual
All loan brokers must employ at least one individual who is capable of managing the day to day operations of the loan brokerage business for each branch location. Qualifying individuals are equivalent to branch managers, but are described as qualifying individuals on the application form.
Step 3 – Request a NMLS Account
The Maine Loan Broker 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 4 – Complete the Application
- Company business plan containing the following information:
- Marketing strategy
- Target markets
- Operating structure
- Certificate of Good Standing
- Sample contract made with consumers
- Sample disclosure document given to consumers
- Management chart detailing the company’s hierarchy
- Organizational chart detailing the company’s ownership structure
- Trust account authorization
- Company business plan containing the following information:
Loan brokers must pay a $500 licensing fee when submitting their application
How Do Maine Loan Brokers Renew Their License?
Loan brokers can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Maine Loan Broker License expires on July 31 of even numbered years (2022, 2024 etc) and must be renewed before the expiration date.
What Are the Insurance Requirements for the Maine Loan Broker License?
The State of Maine 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 Maine Loan Brokers File Their Bond?
Loan brokers 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 loan brokerage company. 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 state of incorporation
- Date the bond is signed
What Can Maine Loan Brokers Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, loan brokers in Maine 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 contractual obligations with consumers
What Other Insurance Products Can Agents Offer Loan Brokers in Maine?
Maine 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 Maine Loan Broker Customers?
The NMLS conveniently provides a public database to search for active loan brokers in Maine. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.