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California Finance Lender or Broker Bond

California Finance Lender or Broker Bond

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Who Requires the Finance Lender or Broker Bond and Why Is It Needed?

Tablet. Finance Lender or Broker Bond for businesses engaged brokering commercial loans.

California Finance Lenders and Brokers are required to furnish a surety bond for the benefit of the Commissioner of Business Oversight of the State of California to ensure faithful compliance with California Financial Code Section 22112. The surety bond is mandated for those licensed to engage in business under and pursuant to the provisions of the California Finance Lenders Law, and is required under the provisions of the California Finance Lenders Law.

How Much Will My Surety Bond Cost?

Take 2 minutes to provide the basic information required to get the best rates for your California Finance Lender or Broker Bond. The quote request is free and there is no obligation to you. If you prefer, please call 1‐800‐608‐9950 to speak with one of our friendly bond experts. We can help guide you through the bonding process and identify the lowest cost in the market for your situation.

If you are interested in spreading out the cost of your bond over time, we can offer convenient financing plans for many types of surety bonds. More information will be provided with your quote.

What Does the Bond Protect Against?

The bond guarantees that the principal, and all agents and employees representing the principal comply with the provisions of the California Finance Lenders Law and of all rules and regulations lawfully made by the Commissioner of Business Oversight. Under the terms of the surety bond, the bonded principal must also apply all funds received, perform all obligations and undertakings, pay to the Commissioner of Business Oversight of the State of California and to any person or persons, all moneys which become due or owing the State or to any such person or persons.

What is Needed to Obtain My License or Registration?

Any person conducting business as a finance lender or finance broker typically must obtain a California Finance Lenders license. A finance broker who is legally licensed under the California Financing Law is permitted to only broker loans to lenders licensed as finance lenders. Brokering loans or collecting brokerage commissions from other types of lenders such as credit unions and banks is not permitted under the authority of the license.

The state of California defines finance lenders and finance brokers as follows; 

  • A finance lender includes any person engaged in the business of making consumer loans or making commercial loans.
  • "Finance broker" includes any person engaged in the business of negotiating or performing any act as broker in connection with loans made by a finance lender. A finance broker licensed under the California Financing Law may only broker loans to lenders licensed as finance lenders. The license does not provide the broker with the authority to broker loans to and collect brokerage commissions from other types of lenders such as credit unions and banks.

Licensing Qualifications for Those Engaged in Residential Lending or Brokering

  1. Maintain a $50,000 net worth for Brokers; $250,000 net worth for Lender/Brokers
  2. Furnish a surety bond in the minimum coverage amount of $25,000 . The specific bond amount will be set by the state based on the origination activities conducted by the licensee.
  3. Have no criminal history or history of sanctions by any regulatory agency resulting from dishonesty, fraud or deceit.
  4. Prepare a business plan consistent with the business of finance lender.

An application for a license under the California Financing Law for persons engaging in residential lending or brokering must be filed through the Nationwide Mortgage Licensing System (NMLS).

Licensing Qualifications for Those Engaged in Non-Residential Lending or Brokering

  1. Brokers must have and maintain a $25,000 net worth;
  2. Furnish and maintain a surety bond in the coverage amount of $25,000.
  3. Have no history of criminal history or history of sanctions by any regulatory agency resulting from dishonesty, fraud or deceit.
  4. Prepare and submit a business plan consistent with the business of finance lender.

A paper application for a license under the California Financing Law for companies engaging in lending or brokering that is secured by other than residential real property should be downloaded from the state website and submitted to the Los Angeles office of the Department.




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