Payday Loan Bonds

An important thing to understand about payday loan bonds is that states commonly base your bond requirement on the number of locations your business operates. Some states may cap their bond amounts, while states like Wisconsin do not.

Additionally, if you offer online loan services, you may still be required to post a surety bond within each state where you offer loans—regardless of whether you have a physical location there.

A payday lender bond is an agreement between three parties:

• The principal (payday lender), who posts the bond
• The obligee (state), who requires the bond be posted
• The surety (bonding company), who issues the bond

When a principal posts a payday lender bond, they are guaranteeing that their lending business will be operated properly. The surety extends the principal a financial guarantee under the bond to pay claims made against them, while also guaranteeing to the obligee that the principal will fulfill their business obligations: legal, ethical, and otherwise.

If a claim made against the bond is upheld and the surety pays the claim, the principal must reimburse the surety for the amount they paid under the bond agreement.

Having a bond in place reassures your customers that your business is legitimate and they will have recourse if there are any issues.

NNA Surety Bonds offers e-filing of payday lender bonds through the electronic NMLS system, which ensures your bond is filed directly with the licensing authority. Our surety bond experts will walk you through the entire bonding process.

You may see payday lender bonds marketed under different names in different states: Small Loan Broker Bonds, Small Loan Lender Bonds, Pay Day Advance Bonds, and Money Lender Bonds are all the same as the Payday Lender Bond offered by NNA Surety Bonds.