BLOG VIEW: A bill recently passed in the state of Vermont introduces changes to the licensing requirements for loan solicitors. According to the new bill, as of Dec. 31, loan solicitation companies and individuals will be required to obtain a surety bond in order to stay in business.
The bill also introduces changes to the licensing period for solicitors, as well as amends the sums for applying and obtaining a license. Read on for a full picture of the changes to the loan solicitor application process in Vermont, as well as a more detailed explanation of the surety bond requirement.
Current legislation for loan solicitors
Currently, loan solicitors in the state of Vermont are not required to post a surety bond when applying for a license. Furthermore, licenses for solicitors who have applied for their license prior to the passing of H.B.182 (May 4) are valid for three years. After that, upon applying for a license renewal, such licensees will be issued a license with a licensing period for one year.
But in order to clarify the role of loan solicitors in the state, as well as to impose clearer regulations, the state of Vermont has now introduced more specific licensing requirements for loan solicitors.
New licensing requirements for loan solicitors
According to H.B.182, loan solicitors in the state of Vermont have until December 30 to obtain a surety bond in the amount of $25,000 in order to be allowed to continue their operations. Both the license application, as well as the surety bond, must be posted in the Nationwide Multistate Licensing System and Registry (NMLS).
Any business or individual who is licensed as a loan solicitor who has not obtained a surety bond by Dec. 30 will see his or her license revoked on Dec. 31. If this happens, individuals will need to start their licensing process from the beginning, which may include paying fees and penalties.
Licenses for Vermont loan solicitors are also shortened to one-year periods, and the official renewal date will be on or before Dec. 1. And as of July 1, loan solicitors will also be required to post the following disclosure in all advertisements of loans and solicitation of leads:
“This is a loan solicitation only. [Insert licensee name] is not the lender. Information received will be shared with one or more third parties in connection with your loan inquiry. The lender may not be subject to all Vermont lending laws. The lender may be subject to federal lending laws.”
Finally, in order to obtain the license, applicants will need to pay a $500 licensing fee, a $500 application and investigation fee, and a $100 NMLS processing fee. When renewing their licenses, applicants will need to pay a $500 renewal fee and a $100 NMLS processing fee.
So, why are solicitors required to obtain a surety bond?
Purpose of the vermont loan solicitor surety bond
Applicants for a loan solicitor license are required to obtain a surety bond as a form of protection for the state and their clients. Surety bonds are financial guarantee agreements issued by surety bond companies. These agreements secure financial backing in cases in which a bonded individual or business violates state or federal laws and regulations and causes damages or losses to the public or the state.
So, if a loan solicitor causes harm by acting dishonestly or committing fraud, a claim can be filed against his or her bond, and claimants may obtain compensation.
What do you think of the new bill and requirements for loan solicitors? Do you think it will raise the standards for businesses or create difficulties? Let us know in the comments!
Todd Bryant is the president and founder of Bryant Surety Bonds. He is a surety bonds expert with years of experience in helping business owners get bonded and start their businesses.