Mississippi Small Loan Bond: A Comprehensive Guide
July 6, 2021
This guide provides information for insurance agents to help their customers obtain Mississippi Small Loan Bonds
At a Glance:
- Average Cost: $100 per year
- Bond Amount: $1,000
- Who Needs it: All small loan brokers operating in Mississippi
- Purpose: To ensure the public will receive compensation for any damages should the small loan broker fail to comply with licensing law
- Who Regulates Small Loan Brokers in Mississippi: The Mississippi Department of Banking and Consumer Finance
Mississippi statute 81-19-5 requires all small loan brokers operating in the state to obtain a license with the Department of Banking and Consumer Finance. The Mississippi legislature enacted the licensing laws and regulations to ensure that small loan brokers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, small loan brokers must purchase and maintain a $25,000 surety bond to be eligible for licensure.
What is the Purpose of the Mississippi Small Loan Bond?
Mississippi requires small 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 Mississippi statutes 76-67-101 through 139. Specifically, the bond protects the public in the event the loan broker engages in any acts of fraud or breaches any contracts 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 Mississipp Small Loan Surety Bond?
BondExchange makes obtaining a Mississippi Small Loan 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 Mississippi Small Loan Bond?
Surety companies will run a credit check on the owners of the lending company to determine eligibility for the Mississippi Small Loan bond. Since the bond has such a low limit ($1,000), the same rate is offered to all small loan brokers in Mississippi regardless of their credit score. The credit check is a “soft hit”, meaning that the credit.
How Much Does the Mississippi Small Loan Bond Cost?
The Mississippi Small Loan Bond costs just $100 per year.
How Does Mississippi Define “Small Loan Broker?”
Mississippi statute 75-67-103 defines a small loan broker as any individual or business entity who lends money that is to be paid back in monthly installments or regular installments for periods of more or less than 1 month, regardless of whether or not the lender requires security from the borrower.
How do Small Loan Brokers Apply for a License in Mississippi?
Small loan brokers in Mississippi 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 Mississippi Small Loan License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Small loan brokers brokers must purchase and maintain a $1,000 surety bond
Step 2 – Request a NMLS Account
The Mississippi Small 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 3 – Complete the Application
- Company financial statements prepared by a CPA
- The following company contact information:
- Consumer Complaint (Public)
- Exam Delivery
- Legal – Regulations
- Company business plan containing the following information:
- Marketing strategies
- Target markets
- Fee schedule
- Operating structure the applicant intends to employ
- Certificate of Good Standing
- Company formation documents
Small loan brokers must pay a $750 fee when submitting their license application
How Do Mississippi Small Loan Brokers Renew Their License?
Small 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 Mississippi Small Loan License expires on December 31 of each year and must be renewed before the expiration date.
What are the Insurance Requirements for the Mississippi Small Loan Broker License?
Mississippi does not require small loan loan brokers to purchase any form of liability insurance as a prerequisite to obtaining a business license. Small loan brokers must purchase and maintain a $1,000 surety bond.
How Do Mississippi Small Loan Brokers File Their Bond?
Small 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 lending company. The surety company should include the following information on the bond form:
- Name and address of entity/individual(s) buying the bond
- Surety company’s name and address
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can Mississippi Small Loan Brokers Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, small loan brokers in Mississippi 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
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer Small Loan Brokers in Mississippi?
Mississippi does not require small loan brokers to purchase any form of liability insurance as a prerequisite to obtaining a business 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 Mississippi Small Loan Broker Customers?
The NMLS conveniently provides a public database to search for active small loan brokers in Mississippi. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.