Becoming a freight broker is an appealing opportunity for those looking to enter the logistics and transportation industry. However, one of the first regulatory hurdles a new broker encounters is the requirement to secure a freight broker bond, also known as the BMC-84 bond. While this requirement ensures protection for carriers and shippers, the upfront cost of the bond—usually $75,000—can be a significant barrier. Fortunately, many brokers can take advantage of the BMC-84 payment plan, which provides a more accessible path to compliance.
What is a BMC-84 Bond?
The BMC-84 bond is a type of surety bond required by the Federal Motor Carrier Safety Administration (FMCSA). It guarantees that freight brokers will adhere to their contractual obligations and financial responsibilities, particularly paying motor carriers and shippers in a timely manner.
Freight brokers must file either a BMC-84 surety bond or a BMC-85 trust fund in the amount of $75,000. Most brokers opt for the BMC-84 bond because it doesn’t require placing the full amount in a trust account upfront. Instead, they pay a premium—often between 1-10% of the bond amount—based on factors like credit score, financial history, and experience.
The Challenge: Upfront Costs
The main challenge with securing a BMC-84 bond lies in the initial payment. Even if a broker qualifies for a 5% premium, they’re still facing a $3,750 payment—due immediately. For a startup broker, that kind of cash flow may not be readily available.
This is where the BMC-84 payment plan becomes an attractive solution. It allows brokers to break down that upfront premium into smaller, manageable monthly payments while still getting the bond coverage required by FMCSA.
How the BMC-84 Payment Plan Works
The BMC-84 payment plan is a financing option offered by many surety bond providers. Instead of requiring the full premium upfront, the provider structures a payment schedule—usually over 6 to 12 months—making it easier for brokers to maintain compliance without straining their finances.
Here’s a general breakdown of how the plan works:
1. Apply for the Bond
The process begins with an application, which includes personal and business financial information. A soft credit check is typically performed to assess the risk and determine the premium.
2. Receive a Quote
Once underwriting is complete, the broker receives a quote for the BMC-84 bond premium. If the quote is too steep to pay in full, the broker can request a payment plan.
3. Payment Terms Are Set
Depending on the surety provider, payment plans can vary. Most common terms include:
- 20–40% down payment
- 6 to 12 monthly installments
- Interest or administrative fees may apply
This means that a $3,750 bond premium could potentially be secured with just $750 to $1,500 down, with the balance paid over the next several months.
4. Bond is Issued and Filed
Once the initial payment is made and the agreement signed, the bond is issued and filed electronically with the FMCSA. Brokers can legally begin operating once the bond is on file.
5. Monthly Payments Continue
The broker continues to pay the monthly installments until the balance is paid in full. Failing to make payments may result in bond cancellation, so it’s critical to maintain timely payments.
Why Choose a BMC-84 Payment Plan?
Using a BMC-84 payment plan offers several benefits:
- Improved Cash Flow: You don’t need to commit a large lump sum of money, freeing up capital for other startup costs.
- Quick FMCSA Compliance: You can get your bond in place faster, allowing you to begin operations sooner.
- Flexible Financing: Payment plans allow brokers to build their business without financial strain.
- Credit-Building Opportunity: Consistent payments on a bond plan can help establish or improve your business credit profile.
For brokers with less-than-perfect credit, payment plans may also help reduce the risk of rejection, as some sureties are more willing to work with applicants when payments are spread out.
Working with the Right Surety Provider
Choosing a surety provider that offers flexible and transparent payment options is crucial. Some providers tack on hidden fees or offer rigid plans that don’t align with your business cash flow.
This is where Can do Surety Bonds stands out. They specialize in helping freight brokers get bonded affordably and quickly. Whether you’re launching a new brokerage or scaling an existing operation, Can do Surety Bonds offers customized BMC-84 payment plans designed to fit your budget and timeline.
Their application process is streamlined, their customer service is knowledgeable, and they’re known for working with clients across a wide range of credit profiles.
Tips Before You Commit
Before signing up for a payment plan, consider the following tips:
- Review the Total Cost: Make sure you understand the total cost over the life of the plan, including any interest or fees.
- Choose a Reputable Provider: Work with companies like Can do Surety Bonds that specialize in freight broker bonds.
- Don’t Miss Payments: Missing payments could jeopardize your bond and your FMCSA authority.
- Check Renewal Terms: Understand how the payment plan affects future renewals. Many bonds renew annually, so plan accordingly.
Conclusion
The BMC-84 payment plan is a valuable tool for freight brokers who need bonding coverage but want to preserve capital for growing their business. It allows for FMCSA compliance without a large upfront investment, making it a popular option among new and small brokerage firms.
By choosing a reliable surety partner like Can do Surety Bonds, brokers can take advantage of flexible payment terms, excellent service, and peace of mind. Whether you’re just starting or expanding, a well-structured payment plan can help you move forward with confidence.