Surety Bond Encyclopedia

Short Term Lender Nonprofit License (NMLS) Bond - Statewide in Ohio

Brief Summary

The nonprofit rate cuts the bond in half, from $100,000 to $50,000, but only for an organization incorporated under Ohio's nonprofit corporation law. Confirm that status first and the rest of the filing is simple. One flat amount, one obligee, renewed with the license each year.

A nonprofit corporation incorporated under Ohio Revised Code Chapter 1702 that makes short-term loans posts a $50,000 corporate surety bond under ORC 1321.37, half the $100,000 required of other short-term lenders. It also needs a net worth of at least $50,000 and pays one half of the fee otherwise required. The bond runs to the Ohio Superintendent of Financial Institutions for the benefit of injured borrowers.

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How to Apply for a Short Term Lender Nonprofit License (NMLS) Bond:

Confirm the organization is a nonprofit corporation incorporated under ORC Chapter 1702.
Document net worth of at least $50,000.
Use the exact corporate name, any trade names and the main office address for the bond.
Obtain a $50,000 corporate surety bond in the Division's prescribed format.
Submit the license application with one half of the fee otherwise required.
Keep the bond continuous and file the renewal so it is received by December 31.

Detailed Information About the Ohio Short Term Lender Nonprofit License (NMLS) Bond:

Which nonprofits get the reduced amount

Ohio Revised Code 1321.37 gives the lower figures to a nonprofit corporation that is incorporated under Chapter 1702 of the Revised Code, which is Ohio's nonprofit corporation law. The statute keys the reduction to that incorporation, not to federal tax exempt status. An organization that does not meet that test falls under the standard $100,000 bond and $100,000 net worth.

What the qualifying nonprofit posts

A corporate surety bond in the amount of $50,000, from a bonding or insurance company authorized to do business in Ohio.
A net worth of not less than $50,000.
One half of the fee otherwise required for the license.

The amount is flat. It does not move with loan volume.

The bond names the Superintendent of Financial Institutions as obligee and exists for the exclusive benefit of any borrower injured by a violation by the licensee or its employees. Its term must coincide with the license term. Ohio Administrative Code 1301:8-11-06 requires the Division's prescribed format, the licensee's name and main office address, and every trade or alternative name the organization uses.

If the bond lapses

The nonprofit must cease all short-term lending activity until a compliant bond is in place, and failing to replace it within 60 days of the first day of the lapse is grounds for revocation. A cancellation does not take effect until 30 days after the superintendent receives written notice by certified mail, and liability for acts during the bond term lasts at least two years after the bond ends.

Renewal

Short-term loan licenses expire every December 31 under OAC 1301:8-11-05. The renewal application has to be received by the Division on or before that date.

The loans themselves

ORC 1321.39 caps a short-term loan at $1,000, with a term of 91 days to one year, and a shorter minimum allowed only in limited income based cases. Under ORC 1321.36, no person may make, offer or broker a short-term loan by telephone or mail.

Eligibility and Requirements for a Ohio Short Term Lender Nonprofit License (NMLS) Bond:

Bond amount of $50,000 for a Chapter 1702 nonprofit corporation.
Obligee: Ohio Superintendent of Financial Institutions.
Surety authorized to do business in Ohio.
Bond protects borrowers injured by a violation of the Short-Term Loan Act.
Liability continues for at least two years after the bond is terminated or canceled.

Ohio Short Term Lender Nonprofit License (NMLS) Bond FAQs:

We are a 501(c)(3). Do we automatically qualify for the $50,000 bond?

The statute ties the $50,000 amount to a nonprofit corporation incorporated under ORC Chapter 1702. It does not mention federal tax exempt status. Confirm your Ohio incorporation before ordering the bond.

Does the bond amount go up as we lend more?

No. For a qualifying nonprofit the bond is a flat $50,000 under ORC 1321.37.

What else is reduced for nonprofits?

The net worth requirement drops to $50,000, and the nonprofit pays one half of the fee otherwise required.

What if our bond is canceled?

Cancellation takes effect no sooner than 30 days after the superintendent receives written notice. If coverage lapses, all short-term lending must stop, and the license can be revoked if no compliant bond is in place within 60 days.