Want to attend a coding bootcamp in Chicago? It could be your ticket to a new, tech-powered future, but attendance won’t exactly come cheap. Average tuition is a little over $10,000, and as a result, many prospective students turn to personal loans to finance their lessons.
They could pursue a traditional private loan, but if
has their way, those students will opt instead for a more alternative way to borrow money.
The company — hot off a $6 million Series A led by Chicago’s Continental Investors LLC (who was joined by HC Technologies, D-W Investments, Bridge Investments and Service Provider Capital) — offers what it calls “Income Share Agreements," lending anywhere from $1,500 to $10,000 to individuals short on cash.
But there’s a catch: in exchange for capital, a borrower commits to sharing a calculated portion of his or her income. Under Cumulus’ model, customers (of which the company already counts more than 500) agree to pay no more than 10 percent of their income over a set course of time. That percentage is dependent upon things like credit score and loan size, and payments slide as borrowers bring in more — or less — money.
In other words, if your income increases, so too does the amount you pay, while a reduction in income similarly results in reduced payments.
It’s a wager for fast cash today on your next two to six year’s worth of earnings, but Cumulus said borrowers have the option to buy out their contracts at any time, so long as they’ve been up-to-date with payments. And for users who find themselves down on their luck and out of work, payments could (albeit temporarily) screech to a halt.
“The flexibility and inherent affordability of an Income Share Agreement allows Cumulus’s customer to better weather unexpected financial shocks resulting from changes in their income or employment,” the company said in a statement.
In addition to their Series A, Cumulus announced it had raised $25 million in debt financing.
”We are incredibly excited to expand the reach of our Income Share Agreement product. Historically, demand for our product has exceeded the capital that Cumulus has had available to fund customers,” said Cumulus Funding’s CEO Nathan Popkins in the statement. “This relationship with our funding partners will give us extensive runway to enter into new ISA contracts with customers, and our equity capital will let us expand our reach into new states, add to our tremendous Chicago-based team, and build new strategic partnerships.”
Image via Cumulus.
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