South Dakota

Money Lender Bond

How much does a money lender bond cost in South Dakota?

The South Dakota Division of Banking requires money lending companies to post $10,000 surety bonds for the first license and $2,500 surety bonds for each additional license.

These bonds are issued based on your credit, meaning the price you’ll pay depends on a review of your credit report. The cost of these bonds start at a 1.5% minimum rate once reviewed. The best way to find out exactly how much you’ll pay for your surety bond is to request your free surety bond quote now.

Why do I need a South Dakota money lender bond?

In South Dakota, it is required under SD statute 54-4-40 that all money lenders conducting business in the state must obtain a license with the Division of Banking.

According to South Dakota statute 54-4-36, a money lender is any business entity that lends money to consumers or creates, holds, purchases, or acquires retail installment contracts. In order to do such business, one of the requirements in the process of licensure is to be bonded. 

The bond guarantees that the customer of the money lender’s services will receive financial compensation for any harm incurred if the money lender fails to comply with the regulations stated in South Dakota statute 54-4. In short, the bond is a type of insurance that protects the public if the lender:

• Harasses or abuses customers
• Makes false or misleading representation
• Engages in unfair lending practices or activities
• Performs acts of omission or commission that are breaches of trust

These bonds protect the state or any person who suffers loss or damages as a result of the principal’s (money lender’s) unlawful business practices up to the full amount of the bond. The principal must reimburse the surety in a timely manner for all damages paid out.

Entities that are exempt from South Dakota Codified Law (SDCL) 54-4 are:

• Any state bank and its subsidiary
• Any national bank and its subsidiary
• Any bank holding company and its subsidiary
• Any other federally insured financial institution, its holding company, and subsidiary
• Any South Dakota charted trust company
• Any person selling goods or services and providing financing for such goods or services are exempt from the licensing requirements of SDCL 54-4
• The State of South Dakota, any political subdivision of the state, and any quasi-governmental organization created by South Dakota law or an executive order of the State of South Dakota and any subsidiary of such organization

How long does my South Dakota money lender bond last?

Money lender bonds in South Dakota can be canceled by the surety if the surety files written notice with the Division of Banking at least 30 days prior to the effective termination date. These bonds become effective on the date indicated on the bond form and remain in full force and effect until terminated or canceled.

How to become a South Dakota money lender

South Dakota statute 54-4-40 requires all money lenders operating in the state to obtain a license with the Division of Banking. The South Dakota legislature enacted licensing laws and regulations to ensure that money lenders engage in ethical business practices. Applicants can refer to NMLS’ application guidelines for more details.

Step 1: Obtain a surety bond

In order to provide financial security for the enforcement of the licensing law, money lenders must purchase and maintain a surety bond to be eligible for licensure.

Give us a call at 1 (800) 308-4358 or submit a bond request now. Our experts will walk you through each step of our fast and easy bonding process.

Step 2: Create an NMLS account

The NMLS website gives step-by-step guidelines on how to access the system, complete the MU forms required below, and access each state's plans, requirements and tutorials. System alerts, system processing fees, and general background information can also be found via the NMLS platform. Applicants can request an account here.

Step 3: Compile your documents

Applicants must prepare documentation to complete the application. The following items are required by the South Dakota Division of Banking:

• Company financial statements prepared by a CPA that have been audited
• Company contacts for both the main company hotline and its complaint service
• Disclosure questions
• Company’s AML/BSA policy, reviewed independently
• Company business plan containing the following information:
  Marketing strategies
  Products
  Target markets
  Fee schedule
  Operating structure
• Certificate of Good Standing
• The following company policies:
  Underwriting
  Collection
  Information security
  Privacy of Consumer Financial Information
• Copies of all documents listing each business transaction
• Uniform consent to be sued
• Documents on the formation of the company (transactions and business agreements, as applicable)
• Company ownerships/management and organization charts
• In-depth résumés of all people in control of business

Step 4: Complete the application and submit the fees

Once the applicant has compiled all the required items and completed each segment of the application, the applicant may submit the application for review. The money lender license application can be submitted through the NMLS. 

Money lenders must pay the following fees when submitting their license application:

• $1,000 license/registration fee
• $100 NMLS initial processing fee
• $15 credit report fee (per control person)

How can I renew my South Dakota money lender license?

South Dakota money lenders must renew their license on December 31 each year, prior to the expiration date listed on the license. The renewal period begins November 1. Money lenders can renew their license, as they applied initially, by using the NMLS system. 

It is important to note that before submitting your application, money lenders should make their application includes:

• Complete responses to all questions
• Explanations where requested
• Attachments as necessary
• The $800 renewal fee (paid by check or money order made payable to “SD Division of Banking”)

Any application that is incomplete, unsigned, or not accompanied by the fee will be returned immediately. We do not hold incomplete applications.

More information on South Dakota money lender license renewals can be accessed here.

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Additional Resources

Nationwide Multistate Licensing System & Registry (NMLS)

South Dakota Division of Banking Forms: Money Lenders

South Dakota Legislature Chapter 54-4 Money Lending Licenses

South Dakota Department of Labor and Regulation Money Lenders - Requirements for Licensure