Circlworld

Lending — Pre-Borrowing Risk Acknowledgement

Version v1.0 · Effective pending · Last updated 2026-06-03

Pre-Borrowing Risk Acknowledgement

Status: v0.1 draft. You should not sign a real version of this acknowledgement until counsel has signed off in your jurisdiction. The version below is the template for what you will see, in plain language, on the screen before a loan is disbursed to you. It mirrors the consumer-credit "appropriate test" required by FCA CONC 5 in the UK and equivalent rules elsewhere.

Where this sits in the Custody Framework

This document operates under Category B of the Custody Framework Charter — the escrow-only category that governs lending pool capital, loan accounts, collateral escrow, and the Circle Protection Reserve. Member vote does not apply to Category B custody; the rule is constitutional. Accounts are opened in the name of the Members' own co-operative legal form, with a multi-signature mandate held by the Lending Committee.

Category A — regular cycle contributions in single-jurisdiction Circles, which may be Member-to-member or escrow-held by Member vote — is outside this surface. Category C — Circles that cross a jurisdictional boundary — adds the escrow-only rule to all funds in those Circles; this surface inherits Category C when the Circle is cross-border.

What you are about to do

You are about to enter a binding loan agreement. The lender is your circle (at L0/L1) or your federation (at L2), acting through its own member-constituted co-operative legal form in your jurisdiction — its own collective vehicle, not a separate or third-party entity. Circlworld is not the lender. A bank or credit union may custody the dedicated multi-signature lending account but is the account provider only and is never the lender. The fellow Members whose pool stakes back this loan are the pool contributors. The pool contributors are listed on your loan disclosure form.

You are about to confirm that you understand what this means. Each box you check is a statement you are signing your name to.

What you are confirming

1. I have read the Pre-Contract Credit Information for this loan. The disclosure form shows the principal, the term, the interest rate, the total cost of credit, the unsecured / secured split, the collateral required, and the installment schedule. I have had time to read it.

2. I can afford the repayments. Based on my current income, my existing financial obligations, and my outgoings, the monthly installment on this loan will not put me into financial difficulty. I understand the affordability cap applied by the platform's underwriting formula — but I confirm the affordability is real for me, not just on paper.

3. I understand the unsecured / secured split. The principal is split into a part that is backed by my Standing (unsecured) and a part that requires collateral I have posted (secured). I understand that Standing is not collateral. What I forfeit on default is the Standing itself, plus the collateral I posted.

4. I have understood the collateral I am posting. If I have posted cash in escrow, I understand it will be held until full repayment and may be liquidated on default. If I have pledged a future hand-payout from a circle, I understand that payout may be intercepted at source on default. If I have a guarantor, I understand the guarantor's own unsecured capacity is consumed by mine and that the guarantor is jointly liable.

5. I understand the consequences of default. If I default — by being more than thirty (30) days late on any installment, by misrepresenting information I provided, or by entering personal insolvency — the lender will execute the loss waterfall documented in the Loss Waterfall Disclosure. The platform-side consequences are:

  • My posted collateral is liquidated.
  • If I have a guarantor, the guarantor's consumed unsecured capacity is called.
  • My own stake in the lending fund (if any) is set off against my debt.
  • Future hand-payouts due to me from circles I belong to may be intercepted at source.
  • The pool's reserve absorbs the next layer of loss.
  • The remaining funders absorb any residual, bounded by my unsecured trust capacity.
  • My Standing is severely penalised. Future unsecured borrowing capacity collapses.
  • A Financial Reliability Record is written. This record is portable across the platform and may be disclosed, with notice to me, to credit reference agencies in my jurisdiction.
  • My borrowing is frozen for at least twelve (12) months. The platform may review my membership.

6. I have the right to withdraw. Where the law of my jurisdiction provides a cooling-off / withdrawal right (typically fourteen (14) days), I may withdraw from this loan without giving any reason. I repay principal plus interest accrued for the period of use. No other charge applies.

7. I have the right to repay early without penalty. I may repay the loan in full or in part at any time without a prepayment penalty. I may owe interest accrued up to the date of repayment.

8. I have the right to dispute charges and balances. Disputes about installment amounts, balances, or late charges go through the Dispute Settlement Centre. Stage 1 Conciliation is free. The Lending Dispute Pathway describes the stages.

9. I understand the dispute escalation limit. Where the disputed amount exceeds the platform's small-claims threshold or the dispute concerns enforcement against pledged property, the matter proceeds in the courts of the lender's jurisdiction, not on the platform.

10. I understand Circlworld's role. Circlworld provides the underwriting formulas, the governance plumbing, the audit trail, and the dispute pathway. Circlworld is not my lender. Circlworld does not hold the loan funds. Circlworld is not a party to my loan contract. My contract is with my circle's / federation's lending pool, in its own co-operative legal form named in the disclosure form. A bank or credit union may custody the account, but it is not the lender.

11. I will not sue Circlworld for this loan. I have read the Platform Indemnification and I accept it.

12. The information I provided is true. My identity, my residence, my income, my existing obligations, my source of any collateral — all true at the time I provided them. I understand that material misrepresentation is grounds for immediate default declaration.

13. I am acting freely. No-one has pressured me to take this loan. No-one has promised me, off the platform, that I do not have to repay. I understand this is a real loan with real consequences.

What you can do before signing

  • Re-read the disclosure form. The Pre-Contract Credit Information has the numbers. Make sure they match what you intend.
  • Talk to your Treasurer. Treasurers are not loan officers — they cannot approve unilaterally — but they can explain the disclosure to you.
  • Use the dispute pathway, even pre-disbursement. If something on the disclosure form doesn't look right (the collateral required, the unsecured split, the affordability number), raise it through the DSC before signing. Stage 1 Conciliation is free and pre-empts most material misunderstandings.
  • Take time. You are not required to sign the same day the disclosure is issued. The form is valid for fourteen (14) days. If you need more time, ask. The lender will re-issue.

You may not need this loan

If the only reason you are signing is that someone — a family member, an employer, a coordinator — told you to, stop. The platform's Care Concierge is available and confidential. You may want to talk through what is happening before borrowing.

Reminder: template only. The version you sign at a real loan disbursement will be specialised for your jurisdiction and will reference the actual Lender and the actual loan numbers.