New Hampshire Small Loan Lender Bond: A Comprehensive Guide
July 23, 2021
This guide provides information for insurance agents to help their customers obtain New Hampshire Small Loan Lender Bonds
At a Glance:
- Average Cost: Between $375 to $1,875 per year based on the applicant’s credit
- Bond Amount: $25,000
- Who Needs it: All small loan lenders operating in New Hampshire
- Purpose: To ensure the public will receive compensation for any damages should the small loan lender violate licensing law
- Who Regulates Small Loan Lenders in New Hampshire: The New Hampshire Banking Department
Background
New Hampshire statute 399-A:2 requires all small loan lenders operating in the state to obtain a license with the Banking Department. The New Hampshire legislature enacted the licensing laws and regulations to ensure that small loan lenders engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, small loan lenders must purchase and maintain a $25,000 surety bond to be eligible for licensure.
What is the Purpose of the New Hampshire Small Loan Lender Bond?
New Hampshire requires small loan lenders to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the small loan lender fails to comply with the regulations set forth in New Hampshire statutes 399-A. Specifically, the bond protects the public in the event the small loan lender engages in any acts of fraud or breaches any contracts made with consumers. In short, the bond is a type of insurance that protects the public if the small loan lender breaks licensing laws.
How Can an Insurance Agent Obtain a New Hampshire Small Loan Lender Bond?
BondExchange makes obtaining a New Hampshire Small Loan Lender Bond easy. Simply login to your account and use our keyword search to find the “loan” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
Is a Credit Check Required for the New Hampshire Small Loan Lender Bond?
Surety companies will run a credit check on the owners of the lending company to determine eligibility and pricing for the New Hampshire Small Loan Lender bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the New Hampshire Small Loan Lender Bond Cost?
The New Hampshire Small Loan Lender Bond can cost anywhere between $375 to $1,875 per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $25,000 bond requirement.
$25,000 Small Loan Lender Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 800+ | $375 |
| 650 – 799 | $500 |
| 600 – 649 | $1,000 |
| 550 – 599 | $1,875 |
How Does New Hampshire Define “Small Loan Lender?”
New Hampshire statute 399-A:1 defines a small loan lender as any business entity that makes loans that are $10,000 or less and have an aggregate interest rate and fee structure of 10% or greater.
How do Small Loan Lenders Apply For a License in New Hampshire?
Small loan lenders in New Hampshire must navigate several steps to secure their licenses. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.
License Period – The New Hampshire Small Loan Lender License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Meet the Net Worth Requirements
Applicants for the New Hampshire Small Loan Lender License must have a positive company net worth (assets – liabilities). Applicants must submit an audited financial statement verifying their net worth when submitting their license application.
Step 2 – Purchase a Surety Bond
Small loan lenders must purchase and maintain a $25,000 surety bond
Step 3 – Request an NMLS Account
The New Hampshire Small Loan Lender License application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.
Step 4 – Complete the Application
All New Hampshire Small Loan Lender License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
-
- Audited company financial statements showing a positive net worth
- The following company contacts:
- Primary
- Primary consumer complaint
- Exam Billing
- Exam Delivery
- Litigation
- Pre-Exam Contact
- Disclosure questions
- Company business plan containing the following information:
- Marketing strategies
- Products
- Target markets
- Fee schedule
- Operating structure
- Certificate of Good Standing
- Company staffing and internal policies
- Samples of all documents used in the regular course of the lending business
- Company formation documents
- Management chart detailing the company’s hierarchy
- Organization chart detailing the company’s ownership structure
- Affirmation form
- Form U-2
- List of all business activity conducted prior to licensure
Small loan lenders must pay the following fees when submitting their license application:
-
- $450 license fee
- $36.25 background check fee (per person)
- $15 credit report fee (per person)
How Do New Hampshire Small Loan Lenders Renew Their License?
Small loan lenders can renew their licenses online through the NMLS. License holders need to simply login to their account to access their renewal application. The New Hampshire Small Loan Lender License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the New Hampshire Small Loan Lender License?
New Hampshire does not require small loan lenders to purchase any form of liability insurance as a prerequisite to obtaining a business license. Small loan lenders must purchase and maintain a $25,000 surety bond.
How Do New Hampshire Small Loan Lenders File Their Bond?
New Hampshire small loan lenders should submit the completed bond form, including the power of attorney, electronically through the NMLS. The surety bond requires signatures from both the surety company that issues the bond and a representative from the lending company. The surety company should include the following information on the bond form:
- Name and state of incorporation of entity/individual(s) buying the bond
- Surety company’s name and state of incorporation
- Date the bond is signed
What Can New Hampshire Small Loan Lenders Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, small loan lenders in New Hampshire must follow all license regulations in the state, including some of the most important issues below that tend to cause claim
- Do not engage in any acts of fraud
- Do not breach any contracts made with consumers
- Properly account for all funds received from consumers
What Other Insurance Products Can Agents Offer Small Loan Lenders in New Hampshire?
New Hampshire does not require small loan lenders to purchase any form of liability insurance as a prerequisite to obtaining a business license. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for New Hampshire Small Loan Lender Customers?
The NMLS conveniently provides a public database to search for active small loan lenders in New Hampshire. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
