Briefly introduce yourself, what is the nature of your business?
Xtenda Housing Finance (XHF) a registered Development Credit Provider, is a community-focused housing institution which provides simple and easy small housing loans to the population living in the peri-urban, rural areas of South Africa.
What inspired the launch of your business?
The problem is, there is no alternative financing model for low-income households. We observed that many homes were incomplete. Hence, we were inspired to help homeowners, build, earn income and grow their wealth.
How did you know there was a market for it?
I completed my thesis on this model and Tony Pillay also completed various papers on the secondary housing market.
How did you raise startup capital?
We raised capital through equity and debt funding (ratio 1:3).
Describe your business model and how you make money?
We provide end-to-end housing finance, development and outsourced construction model. Our income is based on interest and non-interest income.
What challenges has the business faced and how did it overcome them?
There are significant challenges facing start-up under the current economic conditions. The high unemployment and over-indebtedness is a challenge to most financial institutions. We have a mobile app that enables staff to accurately determine affordability. In addition, we have tailored products for consumer education: HELP (housing education lending programme). This is used to educate homeowners on budgeting, property maintenance and managing rental income.
What was the business’s first big breakthrough?
We launched on 1 Sept 2019, and the response has been very good. We have financed approximately 40 rooms. This means we have positively created in excess of 30 jobs impacting further 150 households. This has meant that people have decent and security of tenure. We have now segmented into 3 products that are very unique in this market.
What online tools/apps is business using daily?
- Online Verification and Application Process,
- Fingerprint Verification to Home Affairs (being launched in 2020).
What marketing strategy has proven profitable for your business?
We are testing a few approaches and still early to determine which strategy is most effective.
What remains a challenge for your business today?
High unemployment, poor records at the deeds office, cheaper funding, poor skills, etc.