Freight Broker Bond (BMC-84) vs. BMC-85

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What is the difference between a BMC-84 Freight Broker Bond, and the BMC-85 Trust Fund?

First, let’s get what makes them similar out of the way. Both, the Freight Broker Bond and the Trust Fund, are instruments to fulfill the $75,000 FMCSA requirement that went into effect 10/1/13, but they go about doing this in very different ways.

Freight Broker Bond (BMC-84)

The BMC-84 is secured by a surety bond. Surety Bonds are regulated by the insurance industry and can be viewed almost as a form of credit. In this particular case, the bonding company files a $75,000 policy in your name to the FMCSA so that in the event of a claim you’re covered. Bonds are obtained through an annual premium payment that is calculated as a small percentage of the $75,000 bond amount. They are also fully backed by an A-rated T-listed bonding company which will investigate any claim that should arise before paying out on your behalf. Bond highlights Include:

• No Cash Collateral, Line of Credit, Irrevocable Letter of Credit, or Real Estate required
• Free up working capital for your business
• Full backing of an A-rated T-listed bonding Company
• No admin fees, just an annual premium
• Easy online application

Trust Fund (BMC-85)

The BMC-85 on the other hand, is a financial instrument that requires a $75,000 trust to be created in your name. This Trust is secured by cash or some combination of cash and an Irrevocable Letter of Credit. In this instance, you (the freight broker or freight forwarder) would give $75,000 cash up front to a trust company in order to secure the trust. In most cases, a yearly administration fee will be charged. Should you no longer need this policy, the trust company may retain your money for a year or longer.

Trusts can be more volatile compared to bonds due to the potential insolvency of trust companies, leading to an inability to meet financial obligations. This insolvency can result in bankruptcy, jeopardizing the BMC-85 trust of carriers. Even for sizable carriers, a $75,000 loss from such insolvency can prove to be a significant and potentially fatal setback. Additionally, it's important to note that BMC-85 trust companies are not required to be licensed by the FMCSA and do not benefit from insolvency protection, unlike surety bond companies.

Again, the BMC-85 is summed up by:

• Secured by your cash, or your credit
• Yearly administration fees
• Can hold your cash for several months or a year after you cancel you policy
• Can negatively affect your credit by tying up your capital or securing lines of credit

Bryant Surety Bonds has been offering the BMC-84 for years, from its original $10,000 requirement to its new $75,000 level. Learn more about our BMC-84 Freight Broker Bond Program here.

About us:

Bryant Surety Bonds

Bryant Surety Bonds, Inc. is a surety bond agency based in Pennsylvania. Licensed in all 50 states and with access to over 20 T-listed, A-Rated bonding companies, we have the contacts, expertise, and top service to provide you with a hassle-free experience, all while offering competitive rates for your surety bond.