Surety Bond Requirements for Finance Lenders and Brokers in California
Anyone making consumer or commercial loans in California, or brokering loans on behalf of a licensed finance lender, needs a Financing Law License from the California Department of Financial Protection and Innovation (DFPI), and must post a $25,000 surety bond as part of that license.
If you make or arrange residential mortgage loans, or you employ a mortgage loan originator, your bond amount can increase with your loan volume, using the same tiered structure as California's mortgage lender and broker license. See our California Mortgage Broker and Lender Bond page for that table if it applies to you.
If you have multiple licensed locations in California, you only need one bond to cover all of them.
How Much Does The Surety Bond Cost?
The starting bond premium is 0.75% of your bond amount. For a $25,000 surety bond, that comes to roughly $188 a year. Your exact rate depends mainly on your personal credit score, however, things like previous criminal records or tax liens can affect your bondability.
Our surety bond cost guide explains how sureties price these bonds in more detail.
| License Type | Bond Amount | Starting Cost/Year |
|---|---|---|
| Financing Law License | $25,000 | $188 |
A low credit score doesn't disqualify you from getting bonded. Through our bad credit bond program, we regularly bond applicants who wouldn't qualify elsewhere.
Complete our online application for a free, no-obligation quote.
Why Do You Need a Finance Lender Bond in California?
Your bond is available to recover expenses, fines, and fees the commissioner levies against you, and to compensate borrowers or consumers for losses caused by your noncompliance with the law governing your license.
If you violate the terms of your license, a claim can be filed against your bond, and your surety pays out valid amounts up to your bond's full amount. You are responsible for reimbursing the surety for anything paid out. In case of a claim, you may be required to provide a new bond with the commissioner within 10 days.
If you're new to surety bonds, our what is a surety bond page covers the fundamentals.
How to Get Bonded
Bryant Surety Bonds gets you bonded in three steps.
- Complete our online application. It takes just a few minutes.
- Get approved and pay for your bond. We compare your application across 20+ A-rated carriers and issue your bond as soon as you accept a rate.
- We handle the NMLS filing. Your Electronic Surety Bond (ESB) goes directly into your NMLS record.
After you approve your quote, we'll walk you through granting us authority as your surety inside NMLS, a required step before the commissioner will accept the bond. California requires your original bond to be filed with the commissioner within 10 days of its execution date.
Bond Renewal and Annual Requirements
California Financing Law licensees have three separate annual deadlines to track:
- NMLS license renewal: The standard renewal window runs November 1 through December 31 each year. Your bond needs to be renewed with your license.
- Annual report: Due March 15 every year, even if you didn't conduct any business under the license. Missing this deadline can result in summary revocation of your license.
- Annual assessment: The DFPI notifies you of your assessed amount by September 30, and payment is due by October 31.
We send renewal reminders 1 to 2 months before your bond expires, and our agents can help you look for ways to reduce your bond cost.
How To Apply for a Finance Lender or Broker License in California?
Here's what the process looks like:
- Open or update your NMLS account and complete the Company Form (MU1).
- Assemble your documentation: formation paperwork, a business plan, and organizational documents.
- Meet the minimum net worth requirement of $25,000, backed by financial statements submitted with your application.
- Complete background checks and credit reports for control persons, executive officers, and owners with 10% or more interest.
- Authorize your surety in NMLS so we can file your Electronic Surety Bond directly to your record.
- Cover the required fees (below).
The NMLS website provides the full documentation list for this license.
California Finance Lender Licensing Fees
| Fee | Amount |
|---|---|
| Application fee | $300 |
| License registration fee | $0 |
| NMLS processing fee | $120 |
Credit reports and background checks carry their own NMLS fees. The NMLS System Fees page lists current pricing.
Multistate Licensing and Bonding
NMLS consolidates all your state licenses under one company record. Your bond doesn't carry over between states, though. Most states also don't structure their licensing the way California does.
With Bryant Surety Bonds you can get bonded in all 50 states through a single agency. We save you time and money and you won't need to coordinate separate sureties for each state you're licensed in.
FAQ
Can you broker loans to a bank or credit union with this license?
No. A Financing Law License only authorizes you to broker loans to lenders who are themselves licensed as a finance lender under the same law. Brokering to banks, credit unions, or other institutional lenders isn't covered.
Does your bond amount increase if you start originating mortgages?
Yes. If you begin making or arranging residential mortgage loans and employ a mortgage loan originator, your bond moves to a volume-based tiered structure instead of the flat $25,000. See our California Mortgage Broker Bond page for the specific tiers.
Are banks and credit unions required to get this license?
No. Banks, trust companies, savings and loan associations, credit unions, and several other categories of regulated financial institutions are exempt from the Financing Law entirely.
Does bad credit rule you out from getting bonded?
No. It affects your rate, not your eligibility. We bond applicants across the credit spectrum through our bad credit bond program.
Can you cancel your bond?
Your bond stays in effect until it's cancelled. Cancellation requires written notice to the commissioner, and your surety remains liable for any violations that occurred before the cancellation took effect.
What happens if you miss the March 15 annual report deadline?
Your license can be summarily revoked, even if you conducted no business at all under it that year. The report is required regardless of your activity level.
Get Bonded With Bryant Surety Bonds
Bryant Surety Bonds is licensed to issue surety bonds in California under license number 0N08760.
Questions about getting bonded in California? Call us at 866.450.3412.
