Taking care of money matters is what financial lenders and brokers do. To show that you’re able to do this responsibly, you need a financial lender or broker bond.
A California Finance Lender or Broker Surety Bond shows your clients that you’ll work hard with their money and their financial decisions and that you’ll strive to help your customers make the best decision for them.
Who Needs a Finance Lender or Broker Bond?
If you work with individuals or corporate clients to advise them about financial matters, you most likely need a broker bond. If you advance money to your customers with the expectation of repayment with interest, you are a financial lender.
Both financial brokers and lenders hold a high level of responsibility for their clients’ financial health and are required to hold a California Finance Lender/Broker Bond.
About The California Finance Lender/Broker Bond
In California, financial lenders are responsible for maintaining a $25,000 California Finance Lender/Broker Bond.
Depending on how many loan originators you employ, you may be required to hold a larger surety bond. Those who originate residential mortgage loans generally hold larger surety bonds that vary depending on the amount of loan business the company had in the last year. This bond is part of California’s requirements after a financial license has been issued.
How Does the Bond Work?
While insurance protects your company, a California Finance Lender/Broker Bond is a product designed to protect a customer or obligee.
If you fail to follow through on your work, give incorrect or unethical advice, or encourage clients to pursue a course of financial action that is not to their best advantage, your clients could suffer financial consequences.
If this happens, your client can make a claim against your bond. The surety company who issued your bond will investigate the claim. If they determine the claim to be valid, they will give you the opportunity to satisfy the claim.
If you fail to do so, the surety company can compensate your client. It will then be your responsibility to repay the surety company. That is how a California Finance Lender/Broker Bond protects your clients.
Getting a Lender or Broker Bond
Where can you find a California Finance Lender/Broker Bond? To get the best deal on a bond, visit a company that works with many different quotes to determine which one is the best for you. You’ll work with a bond underwriter who will examine your business references, concerns brought against you, and your financial history as a company. These factors will impact your bond rate.
The price you’ll pay for your bond will vary depending on your history as a financial lender or broker. If you can provide good references and a history of responsible client management and financial management, you will likely get a lower percentage rate on your bond. Bond percentage rates vary from 1 to 15 percent. Your total bond amount may also change if you are in the residential mortgage loan market, as the bond is based on the amount of lending you’ve done over the last financial year.
