DC Money Lender Bond
What is a money lender surety bond?
The Washington, D.C., Department of Insurance, Securities and Banking requires money lenders to post a $5,000 surety bond in order to obtain their business license.
In most cases, surety bonds are required within industries that have a need for additional regulatory oversight or in cases where it’s common for contracts to be issued between a business and their customers.
In general, a bond concerns three primary parties:
- The principal: The money lender posting the bond.
- The obligee: The licensing agency requiring the bond.
- The surety: The company issuing the bond.
Who needs this bond policy?
Not every money lender in D.C. will need this particular bond. Only lenders who offer loans in amounts less than $25,000 and with annual interest rates greater than 6% need to file for this license.
In addition, you do not need this policy if your lending business offers loans secured by real estate not located within Washington, D.C., or to borrowers living, doing business, or incorporated outside of the district.
For a full list of requirements and exemptions, visit the Nationwide Multistate Licensing System Washington, D.C., resource center. If you have questions about the bonding regulations affecting lenders in the District of Columbia, speak with a specialist at NNA Surety Bonds.
How much do money lender bonds cost in Washington, D.C.?
Costs for surety bonds vary, but depend on three major factors:
- The value of the bond
- Your business finances
- Your personal credit rating
In Washington, D.C., money lenders must post a $5,000 surety bond. You are only required to pay a small percentage of the total bond amount as an annual premium.
Currently, NNA Surety Bonds offers one-year D.C. money lender policies with premium costs as low as $100 based on your credit rating. Additional years are available at the following rates:
| Year | Bond Amount | Cost* (Annual Premium) |
|---|---|---|
| 1 Year | $5,000 | $100 |
| 2 Years | $5,000 | $175 |
| 3 Years | $5,000 | $250 |
Why do lenders need a surety bond?
Without a money lender bond, you cannot conduct business in the District of Columbia. The Department of Insurance, Securities and Banking requires this bond as part of their licensing process. Surety bonds are typically required when the governing agency feels extra protection for consumers is needed.
In addition, surety bonds serve as risk mitigation tools by encouraging lawful lending practices. If your money lending company breaks a law and causes damages to a borrower, a claim can be made against your bond. If the claim is upheld, your bond will be used to reimburse these damages up to the full amount of the policy. Afterward, you must pay this amount back to the surety that issued your bond.
Upheld claims can make securing future bond policies difficult. As you are required to file a bond to maintain your license, this can jeopardize your lending business.
How to get a money lender surety bond in D.C.
You can apply for a money lender bond from a reputable surety bond company. Most companies require you to submit an application and will check your credit history. Even if you have bad credit, it's still possible to get a bond. You might just end up paying a higher premium.
NNA Surety Bonds has relationships with A-rated bond companies. We'll work with you to get the bonds you need at the best possible rate. Get in touch with us today for a free quote.