Choosing a Human Capital Contract


How to be sure a human capital contract is for you

And then how to choose the best match as far as a funder

We’ve gone over the various types of human capital contract and the basics of this funding mechanism.  But how do you choose whether this funding type is for you, and then how do you choose an actual human capital contract funder?  The answer is quite personal and unique, and likely boils down to getting independent advice based on your own situation, needs, and alternatives.  That said, we can give some general advice:

Is a human capital contract for you?

Most people who pursue the route of a human capital contract do so either because traditional funding is not available, is too expensive, or will not meet their needs or because they are pursuing an education or trade that is a particular fit for this kind of funding.  So for example if you qualify for student loans but the maximum you can get will meet only a fraction of your funding needs, you may look to this type of funding instrument for your overall loan bill instead of trying to piece together other options.  Or if you are getting a degree that has great income potential you may find that this type of funding becomes a win-win for you and the investor.

How do you choose a human capital contract investor?

Let’s assume that after investigating the above you realize that this is exactly the type of funding that meets your needs.  How do you choose an investor or investment group.  First of course you need to communicate with known human capital contract funders about your needs.  This is usually done with a one page introductory letter to you and your goals.  Once you have a potential funder or two, you need to closely study the terms they are asking for and also what their experience has been in this area.  You may even be able to talk to someone they have funded.  It is normal and not at all insulting to the potential funder for you to have a lawyer take a look at the contract you’ll be asked to sign.