TradeUp is different from traditional lenders. Instead of offering
loans, we offer a new type of financing called an Income Share
Agreement (or ISA). Let’s dive into what makes an ISA an ISA, and
answer some questions you might have about them!
If your pre-tax income isn't above $25,000 a year ($2,084 in a month), your payments are $0.00 for that month. If you are making $25,000 a year or more, you are required to make regular ISA repayments. This means that you still have to pay even if you are employed in a different industry from the trade program you attended. Payments are due on the 1st of the month. Please Note that for some programs your salary floor may be lower than $25,000, please refer to your ISA details for more information.
Let’s take a look at an example ISA, and understand its key terms. Note that your specific ISA terms will probably vary based on the specific program you’re attending.
Funding: This is the amount your ISA is for, and your school will credit this amount towards your tuition.
Length: ISAs expire, unlike loans. If your ISA has a length of 48 payments, that means that after 48 monthly payments, the ISA is over.
Income Share: An income share of 8.0% means that for those 48 months, you’ll make monthly payments equal to 8.0% of your pre-tax income.
Repayment Cap: This cap protects you by limiting payback. No matter how high your salary is, you’ll never pay back more than 1.5x the amount borrowed.
Once you graduate or leave your program, you’ll need to report any changes to your income, even if you don’t meet the minimum salary threshold of $25,000, to your ISA servicer Meratas within five days. When you file taxes, TradeUp will also take a look at your income and W-2. Lets look at some examples of when you need to report your income:
If you leave your job, whether to start a new job or not, you’ll need to report it to Meratas within 5 days.
Anytime your hours increase, you get a raise, you get a bonus, or your salary increases in any way, you’ll need to report it to Meratas within 5 days.
If your hours get cut back, you get a demotion, or your salary decreases in any way, you’ll need to report it to Meratas within 5 days.
If you are unemployed, or employed and making less than $25,000 a year, Meratas will ask you to verify your income about every 30 days.
Once you’ve made the number of payments outlined on your ISA (48 in the previous example), your ISA is complete!
If you pay back up to the repayment cap, your ISA is completed, even if you’ve only made a few monthly payments.
ISA payments can be deferred for a limited time if you’re looking for a job. When all of the deferral months and payment months expire, your ISA ends.
Whether or not you need to make payments on your ISA depends on how far into the program you got before leaving. Lets take a look at the two important scenarios.
Leaving before two weeks: If you leave your program before two weeks (one week for CDL programs) have passed, you are not required to make payments on your ISA, and your ISA will be completely forgiven.
Leaving on or after two weeks: If you leave your program after longer than two weeks (one week for CDL programs), you will be responsible for making payments up to a 1x repayment cap of the money disbursed to the school on your behalf. Typically this is less than the total cost of the program.
