Nevada Loan Services Bond: A Comprehensive Guide

July 30, 2021

This guide provides information for insurance agents to help their customers obtain Nevada Loan Services Bonds

At a Glance:

• Average Cost: Between 1% to 12.5% of the bond amount per year based on the applicant’s credit
• Bond Amount: $50,000 plus an additional $5,000 for each branch location
• Who Needs it: All Nevada lending companies who provide one or more of the following loan services:
  • Deferred deposit loans
  • High-interest loans
  • Title loans
  • Check-cashing services
• Purpose: To ensure the public will receive compensation for any damages should the loan servicer violate licensing law
• Who Regulates Loan Servicers in Nevada: The Nevada Department of Business and Industry

Background

Nevada revised statutes 604 requires all businesses who provide deferred deposit loans, high-interest loans, title loans, and check-cashing services to obtain a license with the Department of Business and Industry. The Nevada legislature enacted the licensing laws and regulations to ensure that loan servicers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, loan servicers must purchase and maintain a surety bond to be eligible for licensure.

What is the Purpose of the Nevada Loan Services Bond?

Nevada requires loan servicers 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 servicer fails to comply with the regulations set forth in Nevada revised statutes 671. Specifically, the bond protects the public in the event the loan servicer 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 servicer breaks licensing laws.

How Can an Insurance Agent Obtain a Nevada Loan Services Bond?

BondExchange makes obtaining a Nevada Loan Services 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 Nevada Loan Services Bond?

Surety companies will run a credit check on the owners of the lending company to determine eligibility and pricing for the Nevada Loan Services 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 Nevada Loan Services Bond Cost?

The Nevada Loan Services Bond can cost anywhere between 1% to 12.5% 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 Loan Services Bond Cost

Who is Required to Obtain a License?

Nevada revised statutes 604 require all business entities who provide one or more of the following products or services to obtain a license.

• Deferred deposit loans
• High-interest loans
• Title loans
• Check-cashing services

How do Loan Servicers Apply For a License in Nevada?

Loan servicers in Nevada must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the application form for details on the process.

License Period – The Nevada Check Cashing – Deferred Deposit Services License is valid for one year from the date of issuance and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

Loan services must purchase and maintain a surety bond with a limit of $50,000 plus an additional $5,000 for each branch location

Step 2 – Complete the Application

All Nevada Check Cashing – Deferred Deposit License applications should be mailed to the following address:

State of Nevada
Financial Institutions Division
Department of Business and Industry
ATTN: Application Processing
1830 E. College Pkwy, STE 100
Carson City, NV 89706

Loan servicers must complete the application in its entirety, and submit the following items:

• • The personal history, personal financial history, and two sets of fingerprints of all company owners/officers
  • Nevada state business license
  • Lease agreement for the company’s business address
  • Copy of the company’s municipal business license
  • Company financial statements
  • Buy/sell agreement for the company’s office (if applicable)
  • Branch application(s) (if applicable)

Loan servicers must pay the following fees when submitting their license application:

• • $400 application fee
  • $375 licensing fee
  • $123.25 background check fee (per person)

How Do Nevada Loan Servicers Renew Their License?

Loan servicers should mail their completed renewal application, including a $375 renewal fee (plus $75 per branch location), to the following address:

State of Nevada
Financial Institutions Division
Department of Business and Industry
ATTN: Application Processing
1830 E. College Pkwy, STE 100
Carson City, NV 89706

The Nevada Check Cashing – Deferred Deposit Services License is valid for one year from the date of issuance and must be renewed before the expiration date.

What Are the Insurance Requirements for the Nevada Check Cashing – Deferred Deposit License?

Nevada does not require loan servicers to purchase any form of liability insurance as a prerequisite to obtaining a license. Loan services must purchase and maintain a surety bond with a limit of $50,000 plus an additional $5,000 for each branch location.

How Do Nevada Loan Servicers File Their Bond?

Loan servicers should mail the completed bond form, including the power of attorney, to the following address:

State of Nevada
Financial Institutions Division
Department of Business and Industry
ATTN: Application Processing
1830 E. College Pkwy, STE 100
Carson City, NV 89706

The loan services 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:

• Legal name and address of entity/individual(s) buying the bond
• Surety company’s name and address
• Bond amount
• Date the bond is signed
• Date the bond goes into effect

What Can Nevada Loan Servicers Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, loan servicers in Nevada 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 Loan Servicers in Nevada?

Nevada does not require loan servicers 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 Nevada Loan Servicer Customers?

Nevada conveniently provides a public database to search for active loan servicers in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.