KRS 286.4-450: Bonding requirements for applications submitted on or after January 1,

2020 -- Demonstration of financial condition -- Managing principal --

Background check -- Incomplete application -- Approval or rejection of

application -- Time limit -- Appeal -- Hearing -- Eligibility if license denied.

(1) For any new application for a license, submitted on or after January 1, 2020, to

qualify for a license, an applicant shall satisfy and maintain, for the duration of

licensure under this subtitle, the f ollowing bonding requirements, which shall cover

all licensed locations:

(a) The applicant shall deposit with the commissioner, in a form directed by the

commissioner, one (1) of the following instruments that satisfy the

requirements of paragraph (b) of this subsection:

1. An irrevocable letter of credit;

2. A corporate surety bond;

3. Evidence that the applicant has established an account payable to the

commissioner in a federally insured financial institution in this state and

has deposited United States currency in an amount that satisfies the

requirements of paragraph (b) of this subsection, with a signed and

notarized acknowledgement from the financial institution; or

4. A savings certificate of a federally insured financial institution in this

state t hat is not available for withdrawal except by direct order of the

commissioner, with a signed and notarized acknowledgement from the

financial institution. Interest earned on the certificate shall accrue to the

applicant;

(b) The instruments identified in paragraph (a) of this subsection shall:

1. Be made payable to the commissioner;

2. Be in the following amounts:

a. One hundred thousand dollars ($100,000), if the applicant is

privately held; or

b. Two hundred fifty thousand dollars ($250,000), if the appl icant is

publicly traded;

3. Provide for claim on the instrument by the commissioner who has a

cause of action under this subtitle. The total liability of the surety,

cumulative or otherwise, shall not exceed the amount specified in the

instrument; and

4. Be available for the recovery of expenses, fines, and fees levied or

imposed by the commissioner under this subtitle, and for losses or

damages that are determined by the commissioner to have been incurred

by any customer as a result of the applicant's or licensee's failure to

comply with the requirements of this subtitle; and

(c) No claim shall be maintained to enforce any liability on an instrument under

this subsection unless the claim is brought within three (3) years after the act

upon which it is based.

(2) (a) For any application submitted on or after January 1, 2020, including renewal

applications, an applicant or licensee shall demonstrate that its financial

condition is sufficient to effectively conduct the business of a licensee in one

(1) or more licensed Kentucky locations by having and maintaining, for the

duration of licensure under this subtitle:

1. If the applicant is privately held:

a. A total net worth of at least fifty thousand dollars ($50,000), when

receivables are one million dollars ($1,000,000) or less; or

b. A total net worth of at least one hundred thousand dollars

($100,000), when receivables are more than one million dollars

($1,000,000); or

2. If the applicant is publicly traded, a total net worth in excess of two

hundred fifty thousand dollars ($250,000).

(b) For the purposes of this subsection, receivables shall be determined upon the

initial application, or for renewal applications, based on the most recent

annual report filed under KRS 286.4-590.

(3) (a) Each applicant shall ha ve, at the time of making application and for the

duration of licensure under this subtitle, at least one (1) managing principal.

(b) Prior to a change in managing principal, each licensee shall file a written

request for the change with the department. Th e written request shall include

sufficient proof that the new managing principal has experience to satisfy the

requirements of this subsection, and the commissioner may deny the requested

change.

(c) Each person named as a managing principal in an applicat ion or written

request under this subsection shall provide the commissioner with sufficient

proof that the managing principal has at least two (2) years of lending

experience working in a financial institution. The commissioner shall

determine from the app lication or written request whether an applicant has

sufficient experience to satisfy this requirement and may withhold approval

based on this determination.

(4) (a) At the time of application, the commissioner shall require each managing

principal and per son in control of an applicant or licensee to submit to a

criminal background check.

(b) The cost of each records background check shall be borne by the applicant or

licensee.

(5) The commissioner may deem an application incomplete if the applicant fails t o pay

any fee, or submit any documentation or information, required under this subtitle

within sixty (60) days from the date the application was filed. After sixty (60) days,

if the application is incomplete, it shall be considered abandoned.

(6) (a) Once a completed application is filed, and after an investigation, the

commissioner shall issue to the applicant a license to make loans in

accordance with this subtitle, if the commissioner finds that the financial

responsibility, financial condition, experien ce, character, and general fitness

of the applicant reasonably demonstrate that the applicant, its managing

principal, and each person in control of the applicant will operate honestly,

fairly, and efficiently in accordance with the purposes of this subtitle.

(b) If the commissioner finds that the applicant does not meet the requirements

under paragraph (a) of this subsection, he or she shall not issue a license and

shall return any license fee paid by the applicant, but shall retain the five

hundred dollars ($500) investigation fee to cover the cost of investigating the

application.

(c) When determining whether an applicant has satisfied the qualifications

required under this subsection, the commissioner shall consider the grounds

set forth in KRS 286.4-490.

(d) The commissioner shall approve or deny every application for license within

sixty (60) days from the receipt of a completed application, unless the time is

extended by a written agreement between the applicant and the commissioner.

(e) If the commiss ioner denies a license, the applicant may, within twenty (20)

days from the date of denial, file a written petition requesting a hearing to

appeal with the office of the commissioner. Upon the timely filing of a

petition to appeal, an administrative hearin g shall be conducted in accordance

with KRS Chapter 13B. If the applicant does not file a petition within the

required time frame, he or she shall be deemed to have waived the right to

appeal.

(f) The official record of the hearing shall be filed in the of fice of the

commissioner as a public record, open to public inspection.

(7) Any applicant, or person in control of an applicant, that has a license denied by the

commissioner shall not be eligible to apply for a license under this subtitle, or serve

as a person in control of an applicant or licensee, until the expiration of one (1) year

from the date a final order denying the license is entered by the commissioner.