Getting A Payday Lender Bond And Helping The Unfortunate
There are thousands and thousands of Canadians, who have a difficult time making it from paycheck to paycheck. Thankfully, these individuals are able to find help, by taking out a payday loan. Of course, the payday loan can be tricky business and is often considered to be untrustworthy by a large portion of the population. This is why payday lenders must proceed through many steps, before they’ll be able to get licensed and begin offering their services in Canada. One of these steps includes acquiring a surety bond in the appropriate amount. Within this guide, you’ll learn more about the payday lender bond.
Who Does A Payday Loan Bond Protect?
Thousands of Canadian consumers will seek a payday loan from lending companies each month. While these loans offer various benefits, they also have some downsides. As with any financial lender, payday loan companies are required to comply with the regulations pertaining to their license. The payday loan bond is utilized to protect consumers from fraud and other wrongdoings.
Groups that wish to offer payday loans to Canadians will need to first acquire a license. The specific laws, which govern payday lenders, may vary from province to province. The specific requirements, which will be listed below, refer to those that operate within Alberta.
- Submit the required application form
- Complete and submit the Addendum for Payday Loans
- Establishments that wish to use independent contractors will also need to submit the completed Statutory Declaration form
- An appropriate amount of security, which depends on number of establishments and whether or not your business offers online lending
- Licensing Fee – 1 year licenses can be acquire for $1000 and $500 for each separate location. 2 year licenses can be obtained for $2000 and $1,000 for each additional establishment.
Before your license is set to expire, you will receive a notification, so you can renew the bond and license in time.
Security And Cost
As mentioned above, the required security will depend on a number of different factors. These will be listed below for your consideration.
- The number of establishments you operate
- Whether or not you offer lending services online
- Your specific province
By working with the province, you will be able to figure out the precise security that will be required for your business. Once this amount has been set in stone, you will want to turn to a surety company for assistance. The surety will help you cover the cost, while requiring you to pay a small percentage of the bond amount. Remember that the surety will determine the required percentage based on several factors, including your personal credit score. By maintaining a good credit score and shopping around, you will eventually be able to acquire a generous premium, which will give you and your business the opportunity to thrive.
Security Requirements in Manitoba
Within the province of Manitoba, payday lenders will need to acquire $25,000 security. They’ll also need to pay a $5,500 licensing fee. Remember that the security can be obtained in the form of a surety bond, as long as a company that is authorized by the Manitoba government issues the bond. Also, these are only specific requirements for those within Manitoba. Checking with your province’s specific regulations is a necessity!