California Finance Lender Bond Overview
Applicants for a finance lenders license in California must post a surety bond in an amount between $25,000 and $200,000.
The bond must be submitted to the Nationwide Multistate Licensing System & Registry (NMLS) which accepts and processes lenders license applications on behalf of the DBO.
Why do I need a bond?
This bond serves as a guarantee that licensed finance lenders in California will faithfully perform their obligations as defined in the Finance Lenders Law.
First-time applicants for such a license must post a bond in an amount of at least $25,000, unless otherwise required by the Commissioner of Business Oversight.
Applicants who renew their license must post a bond in an amount that is determined by the aggregate amount of the loans they have made. Amounts are as follows:
- $25,000 bond for aggregate loans up to $1,000,000
- $50,000 bond for aggregate loans between $1,000,001 and $50,000,000
- $100,000 bond for aggregate loans between $50,000,001 and $500,000,000
- $200,000 bond for aggregate loans upward of $500,000,001
If a licensed finance lender violates the provisions of the Finance Lenders Law, a claim can be filed against their bond. The surety that backs the bond may then extend compensation to claimants for as much as the full amount of the bond.
New to surety bonds? See our ‘What is a surety bond' guide for a full explanation!
You can find more information about the finance lender bond and its cost in the sections below. For any further questions about the bonding requirements for lenders in California, call us at 866.450.3412!
How Much Does it Cost to Get a California Finance Lender Bond?
Your surety bond's cost, also known as its premium, is a fraction of the full amount of the bond. This fraction, or percentage, is determined by the surety you apply within the following way.
How sureties determine the bond cost
When you apply to get bonded, the surety will review your personal credit score. This is the most important factor that is taken into account when your premium is determined. Applicants with high credit scores can expect to receive some of the lowest possible rates on their bond.
Typically, high to medium scores translate into a rate between .5% and 5% of the bond amount.
Since mortgage broker and lender bonds often have high amounts, sureties are likely to also review an applicant's:
- Personal and business financial statements
- Fixed and liquid assets
- Industry experience and record
Want to get an estimate of the cost of your bond? See the table below.
|California Finance Lender Bond Cost Based on Credit Score|
|Bond type||Bond Amount||Credit Score|
|Above 700||650-699||600-649||Below 599|
|Finance Lender / Broker Bond||$25,000||$125-$312||$188-$375||$500-$1,250||$1,250-$1,875|
Can I still get bonded if I have bad credit?
Yes, even if your credit score is low, you can still obtain a bond. Your rate will likely be in the range of 5%-15% because sureties take greater caution when issuing bonds for applicants with low scores.
Even if your score is higher initially, you can consistently lower it over time by increasing your credit score. Learn more about getting bonded with a low score from our Bad Credit Program page!
How Do Bond Claims Occur?
The bond form for the California finance lender bond states that it is for the benefit of who may have cause or action against the lender. Such cause may arise as a result of a lender violating the provisions of the Finance Lenders Law. These include all:
- Lender obligations defined in the law
- The faithful and honest applying of any funds received
- Payment to the Commissioner, the state, and any person, of money which is due by virtue of the provisions of the law
If a lender violates these provisions in any way, causing losses or damages, this may give rise to a claim against their bond.
When a claim is filed, the surety that backs the bond investigates the situation and may extend compensation to claimants for as much as the full bond amount. The lender must, in turn, reimburse the surety for any compensation since sureties do not assume liability for claims filed against bonds.
To get a California finance lender bond, complete our quick bond application form. We'll shortly contact you with a free quote and more information about getting bonded.
If you have any additional questions about this bond, call us at 866.450.3412!