Money transmitter bonds are required in various states for entities that obtain licenses to transmit money. Generally, these bonds are looked at as not risky, but given what’s happening in the banking sector and the cryptocurrency market, a lot of surety markets are non-renewing these bonds.
When a surety non-renews a bond or sends out a notice of cancellation to the obligee (generally the state that granted the license), you need to replace that bond immediately, since it is no longer in effect and is a requirement of the license.
The bonds are required to keep your licensing place in the state or states in which you do business. This creates a major concern if you’re told that within 14–30 days you need to replace your bond program or deposit collateral. Generally, the options for collateral are either a cash deposit held by the surety or a letter of credit issued by a bank acceptable to the surety. When clients hear this, they’re generally not happy. What they need is to find a company like Pedersen & Sons Bonding Agency to come up with solutions for these situations. Not legally operating is a very large problem, and could force some of these companies to go out of business.
If you have a variety of poor options, it’s time to make a change to another surety broker. See what we can do to create solutions if your account is not renewed, is canceled or is having to deposit significant amounts of collateral to keep the account in place. You may have worked with your current broker for years, and everything has been copacetic. Terms are great when we are in a very soft market, which we have been for many years. Companies are taking risks, and it’s easy to look like a surety superstar. Now that the market is hardening for certain types of surety bonds, it’s time to look for a surety bond broker that is able to help you navigate the current market environment. In a market where companies are reducing risk, pulling back bonding facilities and bonding lines, you need a seasoned surety bond broker to advise and guide you through the process.
Please give me a call for a free consultation. Let’s start a conversation and see what I can do differently for you.
PEDERSEN & SONS SURETY BOND AGENCY, INC.
15 Maiden Lane Suite #800
New York, NY, 10038
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