Money lending is a heavily regulated industry, and understanding the requirements for licensure is crucial for anyone looking to operate legally as a Money Lender. This article outlines the key requirements for obtaining a money lender license, focusing on the specifics for South Dakota.
Essential Requirements for Money Lender Licensure
Each physical location operating as a money lender requires its own separate license. These licenses are subject to annual renewal, with applications due before the expiration date of December 31st each year. The fees associated with initial licensing and annual renewals are determined by South Dakota Administrative Rules ARSD 20:07:20:01 and ARSD 20:07:20:02.
A critical component of the application process is securing a surety bond. This bond acts as a financial guarantee, protecting borrowers and the state in case of default by the money lender. For the first license, the bond amount cannot exceed $10,000. Each subsequent license requires a bond of up to $2,500. The bond must be obtained from a surety company authorized to operate within South Dakota and made payable to the State of South Dakota.
Navigating Specific Requirements in South Dakota
Currently, South Dakota doesn’t impose specific educational qualifications, net worth minimums, or physical presence requirements on prospective money lenders. This streamlined approach differentiates South Dakota from other states with more stringent regulations. However, staying informed about potential regulatory changes is vital for maintaining compliance.
For businesses incorporated outside of South Dakota, determining the necessity of a Certificate of Authority is paramount. Contacting the South Dakota Secretary of State’s office at 605.773.3537 will clarify this requirement based on the specific business structure and operations.
Tax Obligations for Money Lenders
Money lenders in South Dakota are subject to the state’s bank franchise tax, a net income tax as defined in SDCL 10-43. For detailed inquiries regarding this tax, reaching out to the Special Taxes office at 605.773.3311 is recommended.
Maintaining Accurate Information
Keeping the Division of Banking updated with any changes to application information is a continuous obligation. Modifications to addresses, contact personnel, ownership structure, or other relevant details must be promptly reported through an amendment to the initial application form. This ensures accurate records and ongoing compliance with licensing regulations.
Securing a money lender license requires careful attention to detail and adherence to specific regulations. Understanding these requirements thoroughly ensures a smooth and compliant operation within the lending industry.
