Mississippi Consumer Loan Broker Bond: A Comprehensive Guide
July 6, 2021
This guide provides information for insurance agents to help their customers obtain Mississippi Consumer Loan Broker Bonds
At a Glance:
- Average Cost: Between $250 to $1,250 per year based on the applicant’s credit
- Bond Amount: $25,000
- Who Needs it: All consumer loan brokers operating in Mississippi
- Purpose: To ensure the public will receive compensation for any damages should the consumer loan broker fail to comply with licensing law
- Who Regulates Consumer Loan Brokers in Mississippi: The Mississippi Department of Banking and Consumer Finance
Background
Mississippi statute 81-19-5 requires all consumer loan brokers operating in the state to obtain a license with the Department of Banking and Consumer Finance. The Mississippi legislature enacted the licensing laws and regulations to ensure that consumer loan brokers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, consumer loan brokers must purchase and maintain a $25,000 surety bond to be eligible for licensure.
What is the Purpose of the Mississippi Consumer Loan Broker Bond?
Mississippi requires consumer loan brokers 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 loan broker fails to comply with the regulations set forth in Mississippi statute 81-19-9. Specifically, the bond protects the public in the event the loan broker 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 loan broker breaks licensing laws.
How Can an Insurance Agent Obtain a Mississippi Consumer Loan Broker Surety Bond?
BondExchange makes obtaining a Mississippi Consumer Loan Broker 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 Mississippi Consumer Loan Broker Bond?
Surety companies will run a credit check on the owners of the lending company to determine eligibility and pricing for the Mississippi Consumer Loan Broker 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 Mississippi Consumer Loan Broker Bond Cost?
The Mississippi Consumer Loan Broker Bond can cost anywhere between $250 to $1,250 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 Consumer Loan Broker Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 800+ | $250 |
| 625 – 799 | $375 |
| 575 – 624 | $938 |
| 450 – 574 | $1,250 |
How Does Mississippi Define “Consumer Loan Broker?”
Mississippi statute 81-19-3 defines a consumer loan broker as any individual or business entity who finds and obtains consumer loans or credit cards for consumers from third party lenders.
How do Consumer Loan Brokers Apply for a License in Mississippi?
Consumer loan brokers in Mississippi must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.
License Period – The Mississippi Consumer Loan Broker License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Consumer loan brokers must purchase and maintain a $25,000 surety bond
Step 2 – Request a NMLS Account
The Mississippi Consumer Loan Broker 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 3 – Complete the Application
All Mississippi Consumer Loan Broker License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
-
- Company financial statements prepared and signed by an executive officer
- The following company contact information:
- Primary
- Licensing
- Consumer Complaint (Public)
- Exam Delivery
- Consumer Complaint (Regulator)
- Legal
- Company business plan containing the following information:
- Marketing strategies
- Products
- Target markets
- Fee schedule
- Operating structure the applicant intends to employ
- Certificate of Good Standing
- Company formation documents
Consumer loan brokers must pay a $300 fee when submitting their license application.
How Do Mississippi Consumer Loan Brokers Renew Their License?
Consumer loan brokers can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Mississippi Consumer Loan Broker License expires on December 31 of each year and must be renewed before the expiration date.
What are the Insurance Requirements for the Mississippi Consumer Loan Broker License?
Mississippi does not require consumer loan brokers to purchase any form of liability insurance as a prerequisite to obtaining a business license. Consumer loan brokers must purchase and maintain a $25,000 surety bond.
How Do Mississippi Consumer Loan Brokers File Their Bond?
Consumer loan brokers 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, number of office locations, and principal address of entity/individual(s) buying the bond
- Surety company’s name and address
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can Mississippi Consumer Loan Brokers Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, consumer loan brokers in Mississippi must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Do not engage in any acts of fraud
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer Consumer Loan Brokers in Mississippi?
Mississippi does not require consumer loan brokers 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 Mississippi Consumer Loan Broker Customers?
The NMLS conveniently provides a public database to search for active consumer loan brokers in Mississippi. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
