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Ohio – Short-Term Lender License (NMLS) Bond | ![]() |
Ohio – Short-Term Lender Nonprofit License (NMLS) Bond | ![]() |
Introduction
In Ohio, businesses and organizations that offer short-term consumer loans must obtain a license from the Ohio Department of Commerce, Division of Financial Institutions, under the authority of Ohio Revised Code §§ 1321.35–1321.48. This regulatory framework distinguishes between for-profit short-term lenders and nonprofit lenders, each with specific requirements and oversight.
Explanation: Ohio Short-Term Lender License – NMLS Bond
The Ohio Short-Term Lender License is a legal requirement for businesses that engage in short-term lending activities within the state. Short-term lending typically involves providing small, short-duration loans to consumers, often with high-interest rates. These loans are meant to be repaid within a short period, usually within a few weeks to a few months.
Short-Term Lender License (For-Profit)
The Short-Term Lender License is required for for-profit companies that provide small-dollar, short-term loans—often with repayment periods of up to one year. These lenders must adhere to strict consumer protection rules, including interest rate caps, disclosure requirements, and licensing regulations. A $100,000 surety bond is required to ensure compliance and protect borrowers from harmful lending practices.
Nonprofit Short-Term Lender License
Ohio also permits nonprofit organizations to offer short-term loans under a separate license classification. These nonprofits typically provide financial assistance as part of a broader mission to support underserved or low-income communities. While subject to many of the same regulations as commercial lenders, nonprofit license holders benefit from a reduced bonding requirement—generally a $50,000 surety bond—and may have flexibility in loan terms and interest structures.
Why is the License Required?
The Ohio Short-Term Lender License is required to ensure that businesses operating in the short-term lending industry comply with state regulations designed to protect consumers. These regulations aim to prevent predatory lending practices, such as excessively high-interest rates and fees, that can trap borrowers in cycles of debt.
By obtaining the license, businesses demonstrate their commitment to operating within the bounds of the law and providing fair and transparent lending services to consumers. It also helps maintain the integrity of the lending industry and fosters trust between lenders and borrowers.
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