FREQUENTLY ASKED QUESTIONS
Income Share Agreements
HOW ARE YOU DIFFERENT FROM A LOAN?
Worldwide, many do not have access to traditional loans, and those that do carry the burden of high interest rates, fees, and inflexible terms. Thus, we use Income Share Agreements (ISAs), rather than a traditional loan structure. Unlike traditional lenders, at Collective Futures, we only get paid if you do. We don’t believe in requiring payments at difficult times such as during unemployment or being medically disabled. Our ISAs liberate you and help secure your financial future.
HOW DOES AN ISA WORK?
Our ISAs are loans that everyone can afford. You agree to pay a fixed percentage—never more than 15%—of your pretax income. If your income goes down, so will your payments. Equally, if your income rises, your payments will increase. However, the percentage never changes. Also, if you have the funds available, you can choose to “buyout” your contract and end your payments at any time.
HOW ARE MY ISA TERMS DECIDED?
Numerous factors will be considered when you apply for an ISA with Collective Futures including, but not limited to: field of study, academic achievement, university standing, program standing, career goals, location of work after graduation, etc.
HOW LONG ARE THE CONTRACTS?
Contract length depends on each student’s full profile. We attempt to project your average yearly income based on a number of factors (e.g. career field, academic achievement) and create contracts with a term length and an income percentage that puts you in a position to be able to pay back what you receive most effectively. Remember, if you have the available funds, you can “buyout” your contract at any time to end your payments sooner.
WHAT IS THE INTEREST RATE?
With Collective Futures there are no interest rates. Instead, you pay a fixed percentage of your income, rather than a fixed interest rate with fixed payments. This percentage is calculated in conjunction with your contract term length. Therefore, your monthly payments can vary based on your amount of income, but the percentage is always the same.
HOW DO I APPLY?
Currently, Collective Futures only provides funding for Southwest School students and alumni. However, other interested students should have their schools contact us.
HOW MUCH OF MY INCOME DO YOU TAKE?
At Collective Futures we never take more than 15% of your pretax income, and normally less. We do this so you can afford your payments along with everything else in life. The determined percent of income you’ll pay to Collective Futures will depend on the factors that form your individual ISA terms. We will be transparent with every student so that you understand the terms of your contract. Remember, this is a negotiation and you can decide if our ISA terms are right for you.
HOW DO YOU KNOW MY INCOME?
With ISAs students are incentivized to hide and postpone income until their ISA term has ended. Thus, Collective Futures requires access to income tax returns, employment agreements (e.g. stock options), as well as noncash sources of income.
Formal-economy employees make monthly payments based on the information provided above; family and small business employees make payments based on 90 percent of the market average for their position; self-employed entrepreneurs give Collective Futures equity in their companies.
DOES MY GENDER OR ETHNICITY INFLUENCE MY ISA TERMS?
Collective Futures will not use your gender, ethnicity, sexuality, religion, or national origin as a factor in determining your ISA terms.
WHAT IF I BECOME UNEMPLOYED?
It’s simple, if you’re involuntarily unemployed, you don’t make payments. We are invested in your future, so we will do our best to help you find work through career counseling and mentoring services. So, let us know if you become unemployed.
We just need you to provide proof that you have received a formal Notice of Separation from your employer or that you are receiving unemployment benefits. Just know that the clock stops on your ISA contract length term and will resume once you’re employed and making payments.
CAN I END MY CONTRACT BEFORE THE TERM IS UP?
As long as you’re up-to-date on your payments you reserve the right to “buyout” or end your contract at any time. How to “buyout” your ISA will be clearly defined in the contract and can be explained to you by Collective Futures at any time. Your “buyout” price will never be more than the amount of funding we provide you. Also, with each payment you make your “buyout” price goes down.