Are You a Loan Broker? You Need to Be Licensed in VermontMay 12, 2017 | By: Sean Murray
Loan broker licensing may have gotten stalled in New York, but in Vermont, it’s the law. Governor Phil Scott made H. 182 official on May 4th, regulating everyone engaged in loan solicitation with prospective Vermont borrowers. Specifically this applies to anyone that:
- offers, solicits, brokers, directly or indirectly arranges, places, or finds a loan for a prospective Vermont borrower;
- engages in any activity intended to assist a prospective Vermont borrower in obtaining a loan, including lead generation;
- arranges, in whole or in part, a loan through a third party, regardless of whether approval, acceptance, or ratification by the third party is necessary to create a legal obligation for the third party, through any method, including mail, telephone, Internet, or any electronic means;
- or advertises or causes to be advertised in Vermont a loan or any of the services described in (i) –(iii). This license does not include the authority to engage in the business of making loans.
The loan solicitation law is separate from a Commercial Lender License, which already requires licensing to solicit business loans under $1 million, as it covers:
- Any company or person who engages solely in the business of making commercial loans of money, credit, goods, or things in action and charges, contracts for or receives on any such loan interest, a finance charge, discount, or consideration therefore. Commercial loans do not include a loan or extension of credit secured in whole or in part by an owner occupied one-to-four unit dwelling. [Note: The company’s main office must be licensed as a commercial lender prior to, or simultaneously with, the filing of a branch commercial lender license.]
- Each location, whether located in Vermont or not, desiring to engage in the business of making commercial loans in Vermont must obtain a separate license by filing a Form MU3 through the NMLS.
- A commercial loan solicited or made by mail, telephone or electronic means to a Vermont business is subject to licensing notwithstanding where the loan is legally made. No person may engage in the business of soliciting or making commercial loans by mail, telephone or electronic means in Vermont unless duly licensed.
Brokers and lead generators should take a good hard look at their marketing since it may not matter if the customer ultimately is referred to a non-lender such as an equipment lessor or a merchant cash advance company if loans are even an option among many.
According to the law, each loan solicitation licensee shall include clearly and conspicuously in all advertisements of loans and solicitations of leads, the following statement:
“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.”
A loan solicitation license cost $1,100.00 (includes a $500.00 Licensing Fee, a $500.00 Investigation Fee; and the $100 NMLS processing fee), according to the government website.
If you’re sending mailers to Vermont businesses, calling them or even marketing to them on the Internet, you should speak with an attorney about both the loan solicitation license and commercial lenders license first.Last modified: May 12, 2017
Sean Murray is the founder of deBanked, an 11-year veteran of the merchant cash advance industry, a casual Lending Club and Prosper note investor, the co-founder of Daily Funder, an alternative lending speaker, consultant, writer, and enthusiast. Connect with me on LinkedIn or follow me on twitter.