Oklahoma Small Loan Lender Bond: A Comprehensive Guide
August 10, 2021
This guide provides information for insurance agents to help their customers obtain Oklahoma Small Loan Lender 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: $25,000 per office location to a maximum of $200,000
- Who Needs it: All small loan lenders operating in Oklahoma
- 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 Oklahoma: The Oklahoma Department of Consumer Credit
Background
Oklahoma statute 3150.2 requires all small loan lenders operating in the state to obtain a license with the Department of Consumer Credit. The Oklahoma 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 surety bond to be eligible for licensure.
What is the Purpose of the Oklahoma Small Loan Lender Bond?
Oklahoma 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 lender fails to comply with the regulations set forth in Oklahoma statute 3150.5. Specifically, the bond protects the public in the event the 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 an Oklahoma Small Loan Lender Surety Bond?
BondExchange makes obtaining an Oklahoma Small Loan Lender Bond easy. Simply login to your account and use our keyword search to find the “small” 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 Oklahoma 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 Oklahoma 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 Oklahoma Small Loan Lender Bond Cost?
The Oklahoma Small Loan Lender 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 $25,000 bond requirement.
$25,000 Small Loan Lender Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 720+ | $250 |
| 680 – 719 | $375 |
| 650 – 679 | $500 |
| 600 – 649 | $1,000 |
| 550 – 599 | $1,875 |
| 500 – 549 | $3,125 |
How Does Oklahoma Define “Small Loan Lender?”
Oklahoma statute 3150.1 defines a small loan lender as any business entity who issues loans that meet the all of the following criteria:
- Is unsecured
- The term is not longer than 12 months or less than 60 days
- Is fully amortized and is payable in substantially equal periodic payments
- Subject to prepayment in whole or in part at any time without penalty
How Do Small Loan Lenders Apply for a License in Oklahoma
Small loan lenders in Oklahoma 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 Oklahoma small loan lender license expires on December 31 of every year and must be renewed before the expiration date
Step 1 – Meet the Net Worth Requirements
Applicants for the small loan lender license must maintain a minimum net worth (assets – liabilities) of at least $50,000 per branch location. Small loan lenders must submit audited financial statements verifying their net worth with their license application.
Step 2 – Purchase a Surety Bond
Small loan lenders must purchase and maintain a surety bond with a limit of $25,000 per office location to a maximum of $200,000
Step 3 – Complete the Application
All Oklahoma Small Loan Lender License applications should be mailed to the following address:
Oklahoma Department of Consumer Credit
3613 NW 56th St., Suite 240
Oklahoma City, OK 73112-4512
License applicants must complete the application in its entirety, and submit the following items:
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- Audited company financial statements indicating a net worth of at least $50,000 per office location
- Military service verification (if applicable)
- Company formation documents
Small loan lenders must pay the following fees when submitting their license application:
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- $700 filing fee
- $500 license fee
- $700 supervision fee of books and records
How Do Oklahoma Small Loan Lenders Renew Their License?
Small loan lenders should mail their completed renewal application, including a $550 fee, to the following address:
Oklahoma Department of Consumer Credit
3613 NW 56th St., Suite 240
Oklahoma City, OK 73112-4512
The Oklahoma small loan lender license expires on December 31 of every year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Oklahoma Small Loan Lender License?
Oklahoma 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 surety bond with a limit of $25,000 per office location to a maximum of $200,000.
How Do Oklahoma Small Loan Lenders File Their Bond?
Small loan lenders should mail the completed bond form, including the power of attorney, to the following address:
Oklahoma Department of Consumer Credit
3613 NW 56th St., Suite 240
Oklahoma City, OK 73112-4512
The small loan lender 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 goes into effect
What Can Oklahoma Small Loan Lenders Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, small loan lenders lenders in Oklahoma must ensure that they 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 Small Loan Lenders in Oklahoma?
Oklahoma 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 other types of 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 Oklahoma Small Loan Lender Customers?
Oklahoma conveniently provides a public database to search for active small loan lenders 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.
