California Financing Law License Bond

A California Financing Law license bond, also known as a California Finance Lender or Broker Bond, is a type of surety bond required by the California Department of Financial Protection and Innovation. The minimum bond amount is $25,000 and the cost of the bond is usually between 1% and 3% of the bond amount.  Surety1 will shop its many markets to procure the right price at the right terms.

How to Get a California Financing Law License Bond

At Surety1.com we make it easy to obtain this surety bond. Our simple, three step process is:

1. Complete the easy to navigate and secure online application. ¹
2. Review the free, no obligation quote from one of Surety1’s professional surety bond agents, usually within one business day.
3. Sign some paperwork and pay the bond premium

Once these steps have been completed, the California Financing Law license bond will be filed electronically by Surety1.com to the NMLS.
^{1 -The name of the applicant on the surety bond application must match exactly the full legal business name of applicant for the license.} 

Surety1.com is a service of AssuredPartners one of the largest and fastest growing insurance agencies in the nation. Representing over a dozen surety bond companies, Surety1.com is the premier online provider of surety bonds nationwide since 2003.

Who Is Required to Have a California Financing Law License?

Any individual or company that engages in the business of making consumer or commercial loans, or any individual or company that engages in the business of negotiating or performing any act as a broker in connection with loans made by a finance lender, whether secured by residential or commercial real property, personal property, or unsecured, must obtain this license through Nationwide Mortgage Licensing System (NMLS).

1. Finance Lender:
   • Makes consumer loans (less than $5,000) or commercial loans ($5,000 or more) directly to borrowers.
   • Examples include auto dealerships offering financing, payday loan companies, and personal loan providers.
2. Finance Broker:
   • Negotiates or performs brokerage acts for loans made by licensed finance lenders.
   • Does not directly lend money themselves, but connects borrowers with lenders and helps facilitate the loan process.
   • Examples include mortgage brokers, loan originators, and some peer-to-peer lending platforms.

A California Finance Lender or Broker Bond is just one of the license requirements. See below for more licensing information.

Who Does Not Need This License

• Banks, trust companies, savings and loan associations, insurance premium finance agencies, credit unions, small business investment companies, California business and industrial development corporations, or licensed pawnbrokers.
• A company licensed under the California Residential Mortgage Lending Act when acting under the authority of that license.
• A California licensed real estate broker when making or arranging a loan secured by a lien on real property.
• A broker-dealer licensed in accordance with Section 25211 of the Corporations Code..
• Any public corporation (any county, city and county, city, town, municipal corporation) and any public entity other than the state as defined in Section 811.2 of the Government Code.
• A company that makes no more than one commercial loan in a 12-month period and does not otherwise engage in the business of lending.
• A company that makes five or fewer commercial loans in a 12-month period, where the loans are incidental to the business of the company, and the company does not otherwise engage in the business of lending.
• Other available exemptions under the California Financing Law can be found in the California Financial Code commencing with section 2205

For more information, visit the California Department of Business Oversight: https://dfpi.ca.gov/: https://dfpi.ca.gov/

How to get a California Finance Lender or Broker License

Obtaining a California Financing Law license involves multiple steps and specific requirements. Here’s a breakdown of the process:

1. Determine Eligibility:
   • Understand exemptions: Not everyone needs a license. Check if your activities fall under exemptions listed in the California Financial Code Section 22005 (https://dfpi.ca.gov/california-financing-law/).
   • Identify license type: Depending on whether you lend directly (finance lender) or connect borrowers with lenders (finance broker), choose the appropriate license type.

2. Meet Prerequisites:
   • Minimum net worth: Have a minimum net worth of $250,000 for residential mortgage lenders and brokers, or $25,000 for others.
   • Surety bond: Obtain a California Financing Law License bond of at least $25,000 (amount could be higher).
   • Criminal background check: Pass a background check for yourself, officers, and key personnel.
   • Education and experience: Depending on the license type, meet specific education and experience requirements.

3. Complete the Application:
   • Use the Nationwide Mortgage Licensing System & Registry (NMLS) for online application: https://mortgage.nationwidelicensingsystem.org/Pages/default.aspx
   • Submit detailed company and individual information, financial statements, and supporting documents.

4. Pay Fees and Submit Application:
   • Pay non-refundable application fees based on the license type.
   • Submit the completed application package electronically through NMLS.

5. DBO Review and Processing:
   • The Department of Business Oversight (DBO) reviews your application for completeness and compliance.
   • This process can take 6-12 months or longer, so plan accordingly.

6. License Issuance:
   • Upon successful review and approval, the DBO will issue your California Financing Law license.

Additional Resources:

• California Department of Business Oversight: https://dfpi.ca.gov/ 
• NMLS California Financing Law Information: https://mortgage.nationwidelicensingsystem.org/Pages/default.aspx
• CA-DFPI California Financing Law License New Application Checklist: https://mortgage.nationwidelicensingsystem.org/slr/Pages/DynamicLicenses.aspx?StateID=CADOC

The information provided above is for general informational purposes only and does not constitute legal advice.  Do not rely solely on the information presented here as a substitute for professional legal counsel.

APPLY for your California Finance Lender Surety Bond today!

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