Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Minnesota collection agency license bond needs. Learn how to get a collection agency license in Minnesota, below.
What Collection Agency Licenses Are Issued in Minnesota?
The Minnesota Department of Commerce (MNDOC) requires all individuals and business entities operating as third-party debt collectors within the state to obtain a collection agency license. If you operate in more than one location as the same entity, each branch location, as well as the main office, must be licensed.
What Are the Steps in the Licensing Process?
In Minnesota, all collection agency license applications must be submitted online through the Pulse Portal. The application fee is currently $9.00 and the licensing fee is $1,000 for the main office and $500 for each branch. These must be paid through the portal as well. But certain supporting documents, along with a copy of the Pulse Portal confirmation page, must be sent directly to MNDOC via fax. These documents include:
- A Certificate of Assumed Name issued by the Minnesota Secretary of State, if applicable
- Applicable formation documents
- Disclosure of officers, partners, directors, etc.
- A Minnesota collection agency bond in the proper amount
The required bond amount is based on the amount collected from Minnesotans in the previous calendar year (minus commissions), with a minimum of $50,000 and a maximum of $100,000.
Why is a Minnesota Collection Agency License Bond Required?
Having an active Minnesota collection agency license bond in place is a requirement for getting and keeping a license to operate as a debt collector anywhere in the state. The bond:
- Guarantees your compliance with all applicable state laws regulating the debt collection industry and the practices of debt collectors
- Protects the state of Minnesota against liability for damages resulting from a licensed debt collector’s violation of any of those laws or regulations
- Provides a source of funds for compensating those who have incurred such damages
How Are Minnesota Collection Agency License Bond Claims Paid?
When you purchase a surety bond, you enter into a legally binding contract that makes you the bond’s “principal” and obligates you to pay all valid claims against the bond. There are two other parties to that contract—the “obligee” requiring the bond and the “surety” underwriting and authorizing the bond.
While the principal bears full legal responsibility for paying claims, the surety typically will pay a claim on the principal’s behalf if it’s not paid right away. This creates a debt that you must reimburse to the surety.
How Much Does a Minnesota Collection Agency License Bond Cost?
The premium cost for the surety bond you’ll need to get a collection agency license is a small percentage of the required bond amount. The surety will assign you a premium rate based largely on your personal credit score.
The creditworthiness of bond applicants is a major concern for the surety because of the risk involved in paying claims up front and being reimbursed by the principal. The more creditworthy you’re considered to be, the lower your premium rate. With good personal credit, your premium rate could be as low as 1% to 3%.
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