Nebraska Installment Loan Company Bond: A Comprehensive Guide
July 21, 2021
This guide provides information for insurance agents to help their customers obtain Nebraska Installment Loan Company Bonds
At a Glance:
- Average Cost: Between 0.5% to 5% of the bond amount per year based on the applicant’s credit
- Bond Amount: $50,000 per branch office
- Who Needs it: All installment lenders operating in Nebraska
- Purpose: To ensure the public will receive compensation for any damages should the installment lender violate licensing law
- Who Regulates Installment Lenders in Nebraska: The Nebraska Department of Banking and Finance
Background
Nebraska statute 45-1005 requires all installment lenders operating in the state to obtain a license with the Department of Banking and Finance. The Nebraska legislature enacted the licensing laws and regulations to ensure that installment lenders engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, installment lenders must purchase and maintain a $50,000 surety bond (per branch office) to be eligible for licensure.
What is the Purpose of the Nebraska Installment Loan Company Bond?
Nebraska requires installment 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 installment lender fails to comply with the regulations set forth in the Nebraska Installment Loan Act. Specifically, the bond protects the public in the event the installment 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 installment lender breaks licensing laws.
How Can an Insurance Agent Obtain a Nebraska Installment Loan Company Bond?
BondExchange makes obtaining a Nebraska Installment Loan Company Bond easy. Simply login to your account and use our keyword search to find the “installment” 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 Nebraska Installment Loan Company Bond?
Surety companies will run a credit check on the owners of the installment loan company to determine eligibility and pricing for the Nebraska Installment Loan Company 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 Nebraska Installment Loan Company Bond Cost?
The Nebraska Installment Loan Company Bond can cost anywhere between 0.5% to 5% of the bond amount 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 a $50,000 bond requirement.
$50,000 Installment Loan Company Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 700+ | $250 |
| 650 – 699 | $500 |
| 625 – 649 | $625 |
| 600 – 624 | $940 |
| 550 – 599 | $2,000 |
| 500 – 549 | $2,500 |
How Does Nebraska Define “Installment Loan Company?”
The Nebraska Installment Loan Act defines an installment loan company as any business entity who makes installment loans to consumers with an interest rate between 16% to 25% per annum.
How do Installment Lenders Apply For a License in Nebraska?
Installment lenders in Nebraska 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 Nebraska Installment Loan Company License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Installment lenders must purchase and maintain a $50,000 surety bond for each licensed branch office
Step 2 – Request a NMLS Account
The Nebraska Installment Loan Company 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 Nebraska Installment Loan Company License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
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- Registered agent appointment and consent form
- Audited company financial statements
- Certificate of Good Standing
- Company formation documents
- Management chart detailing the company’s hierarchy
- Organization chart detailing the company’s ownership structure
- Citizen attestation form (sole proprietors only)
- Affidavit of prior activity
Installment lenders must pay a $100 fee when submitting their license application.
How Do Nebraska Installment Lenders Renew Their License?
Installment lenders can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Nebraska Installment Loan Company License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Nebraska Installment Loan Company License?
Nebraska does not require installment lenders to purchase any form of liability insurance as a prerequisite to obtaining a business license. Installment lenders must purchase and maintain a $50,000 surety bond for each licensed branch office.
How Do Nebraska Installment Lenders File Their Bond?
Installment 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 Installment lending company. The surety company should include the following information on the bond form:
- Name and count(ies) of entity/individual(s) buying the bond
- Surety company’s name
- Date the bond goes into effect
- Date the bond is signed
What Can Nebraska Installment Lenders Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, installment lenders in Nebraska 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
What Other Insurance Products Can Agents Offer Installment Lenders in Nebraska?
Nebraska does not require installment 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 Nebraska Installment Lender Customers?
The NMLS conveniently provides a public database to search for active installment lenders in Nebraska. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
