Rent.ph inks partnership agreement with Lenddo

CEBU, Philippines - With 3.5 million Filipino households having no access to shelter, the shortage in housing has prompted many prospects to consider rentals on top of the conventional owning of residential spaces. But not everyone may be financially-equipped to rent. A popular rental site thinks it already has a solution.

Rental site Rent.ph has embarked on a new partnership this time with an online micro-finance firm Lenddo to help give small-scale financial contact to the middle class wanting to take advantage of its life-improving loans.

Both parties, whose business operations are highly online-driven, are optimistic lessors with insufficient funds will now cut the process short as Rent.ph may refer them to Lenddo, instead of seeking other channels to get the needed funds.

A memorandum of agreement was signed up by both companies on Monday to signify this partnership.

According to Lenddo co-founder Richard Eldridge, their mission is to help create an economically empowered and thriving middle class in developing countries worldwide. Lenddo, which piloted in Manila two and a half years ago, now has branches in Bogota, Colombia and Mexico City.

As a virtual company, Lenddo’s community members can use their reputation on the social media such as Facebook, LinkedIn and Twitter to obtain life-improving loans aligned in healthcare and education, Eldridge said.

However, he pointed out that they are continuously studying on how to expand their scope of services in the future and not just be limited to life-improving loans.

Eldridge said in the Philippines, where there is a rapid emergence of middle class society, the idea is said to have gained ground and is currently picking up, as propelled by the fact that the country for instance is prone to natural calamities.

“When typhoons come and their houses are struck, they need to rebuild them. Instead of going through the traditional banks which mostly cater to the upper class, Filipinos can bank on their online standing to get a loan from us and start rebuilding their lives,” he said.

The co-founder also said that the middle class sector is currently under-banked and is still using the informal sectors such as family, friends and five-six schemes for their financial needs.

Eldridge said the hypothesis behind Lenddo is that it was started with the belief that professionals in emerging markets should have access to the same level of financial products and services that are enjoyed in more mature markets such as Japan, Germany, United Kingdom and the US.

In these developing countries, Eldridge said, the middle class is typically high school or college graduate, employed and spends more hours than anyone else in Asia on the Internet, specifically on the social networks.

Unlike in developed countries where people have access to a credit score which they can build over time, it is hard for developing nations to establish a credible rating agency, and even if one is established, Eldridge believes it would be an agency with “thin-file” clients with no or little available data.

He said this is now where the social media can play its role in terms of providing them important information that will help Lenddo decide whether an applicant has the character and capacity to pay.

As of July 2013, a quick statistics from Lenddo shows it has more than 130,000 members and had processed over 18,000 loans with a daily growth rate of 0.5 percent. Interest rates on loans are pegged at 0.99 to 2.99 percent with loan payment terms available for up to 12 months.

Officials said Lenddo tapped the Philippines as its pilot market since there is a strong sense of community here, whether in a family or a group of friends. This is apparent in the Filipino concepts of “bayanihan” and “utang na loob”.

Eldridge said if the loaner does not pay, this could also affect the credit scores of his friends in the network. If after many times of communicating, he still refuses to pay, Lenddo might escalate the case to seek legal remedy, he added.

Rent.ph, led by its president and chief executive officer Anthony Gerard Leuterio, meanwhile welcomed this new development in their firm, saying Filipinos who have strong desire to rent can finally have a source of financing when they have inadequate funds.

He said most of the constraints impeding most rental arrangements, whether online or offline, are majorly concentrated on financial matters.

With this breakthrough, they hope that renting, which they consider as an indispensable arm of the real estate sector, could sustain its ground and continue to pick up in the market. (FREEMAN)