What is a grain dealer bond?
In many states, you need a grain dealer bond (also called a commodity dealer bond) to obtain a license to trade grain. This license and permit bond ensures your business follows all state and local laws applicable to grain dealers. A grain dealer is a person or entity engaged in the business of purchasing, receiving, selling, storing, or exchanging grain.
When you sign and post a state grain dealer bond, you’re obliged to perform your grain dealer duties legally and ethically. The bond protects grain producers, representatives, and agents you do business with. If you break your bond agreement, you could face costly bond claims.
Like other surety bonds, grain dealer bonds are three-party agreements between an obligee, a principal, and a surety. The obligee is typically the state authority requiring the bond. The principal must purchase the bond, and the surety backs it financially. If there’s a bond claim you can’t or won’t pay to settle upfront, your surety will cover the costs for you. You must later repay them in full – plus interest and fees.
Get Your Grain Dealer Bond:
- In many states, you need a grain dealer bond to obtain a license to trade grain.
- A grain dealer is a person or entity engaged in the business of purchasing, receiving, selling, storing, or exchanging grain.
- Operators and warehousers are often required to post grain dealer or public warehouse bonds.
Who needs grain dealer bonds?
If you want to be a grain dealer, your state may require you to become licensed first and obtain a surety bond as part of the licensing process. Operators and warehousers are often required to post grain dealer or public warehouse bonds. If you wish to work as a grain dealer in any of the following states, you may need a surety bond first.
Sample Bond Form
|Illinois||$5,000 (plus a $10,000 performance bond)|
|Indiana||$10,000 or 0.5% of the total sum paid for grain purchased from producers over the last fiscal year (whichever is greater)|
|Kentucky||$25,000–$1 million||Bond form|
|Montana||$20,000–$1 million||Bond form|
|North Dakota||$10,000 minimum||Bond form|
|South Carolina||Varies||Bond form|
|South Dakota||$50,000–$500,000 (depending on license class)||Bond form|
|Washington||$50,000 –$750,000||Bond form|
How much does a grain dealer bond cost?
Surety bond coverage requirements vary from state to state. You will pay a small percentage of the total bond amount as your annual premium. The better your credit score is, the lower your premium will be. You could pay as little as 1% of the bond requirement if you have excellent credit.
Can I get a grain dealer bond with bad credit?
You should still be able to get the bond you need if you have a low credit score. Your bond rate will likely be higher, between 5% and 10%. Your Business and Personal Financials may also help overcome bad personal credit.
How to Get a Grain Dealer Bond in Your State
ZipBonds offers the fastest and most secure option for getting the surety bonds you need. Our all-digital platform is intuitive and straightforward. Apply today online or call us at (888) 435-4191 to speak with an agent directly.
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.