An Income Share Agreement is a financial structure in which an individual or organization provides something of value to a recipient who, in exchange, agrees to pay back a percentage of their income for a fixed number of years. Whereas, a loan is when you receive money from the bank in exchange for future repayment of the principal, plus interest.
To make it more understandable, here's a fictional example of ISA:
Amey is a mechanical engineer who recently graduated from college but has no job! He loves coding and is trying to find a developer job now. He joins Outscal and opts for ISA. He only pays Rs. 10,000 as a security deposit and joins Outscal Game Development Clan. Now, Amey is not liable to pay anything to Outscal until he gets a good job. 6 months later Amey gets a job offer from a game studio of 5LPAs and he decides to join the company. Amey now starts paying back 17% of his monthly income for the next 3 years.
If Amey decides to switch jobs after working for a year or so, ISA will be paused and Amey will get a moratorium of two months to find a new job and he'll not be bound to pay anything while he has no job in between the job change process.
ISA will be resumed after two months or as he starts earning again (whichever happens first)
Now, here's a fictional example of a Bank Loan:
Abhay pursued engineering from a tech college in India. He took a Bank Loan and invested a huge amount of money on his technical degree. 4 years later, Abhay graduates from college and has no job! 😟
Now since he took a bank loan, he has to pay back the EMIs. Abhay has to pay money without any moratorium or relief even if he's unemployed.
No one took the responsibility for Abhay's loan when he graduated from college. He owed the bank the entire amount, even after he had no source of Income. Whereas in Amey's case he was secured by ISA and Outscal had to get him placed in order to charge 17% of monthly income from Amey.
Had Amey been unemployed, he wouldn't be liable to pay anything back to Outscal until he landed a job.