Consumer finance and buy now, pay later (BNPL) provider Billease has secured a P1-billion credit facility from the Philippine National Bank (PNB), one of the country's oldest and largest banks, as it works to broaden its funding base.

The debt facility is structured around the Personal Property Security Registry (PPSR), the country's centralized movable-asset registry, giving PNB a registered first-rank claim over a pool of Billease's consumer loan receivables, the company said in a statement on Thursday. The structure allows PNB to hold a secured interest over those receivables.

The PPSR was established under Republic Act No. 11057, the Personal Property Security Act of 2018, and is administered by the Land Registration Authority. The law was designed to widen access to credit by letting borrowers pledge movable assets — receivables, inventory and equipment — as registered collateral in a market where secured lending has traditionally leaned on real property.

"It offers a template for how Philippine banks can lend against fintech (financial technology) receivables with confidence," Billease said.

The deal also comes as oversight of digital consumer credit tightens: the Bangko Sentral ng Pilipinas issued a digital lending framework in 2024 setting conduct and disclosure standards for loans that banks and other supervised institutions originate through digital channels.

Under the arrangement, PNB is protected for the life of the facility, which Billease said gives the bank a safe way to increase its exposure to the fast-growing retail consumer credit market. Retail lending has expanded quickly in the Philippines, where household consumption — roughly three-quarters of economic output — underpins demand for short-term credit, and the structure gives PNB a route into that market without originating the loans itself.

The company outlined three safeguards embedded in the structure. "First, Billease pledges more in customer loans than it borrows, ensuring that the collateral is always worth more than the amount outstanding. Second, the pool is refreshed regularly. Loans that have been repaid or fallen behind are replaced with new loans. And third, when Billease customers make repayments to loans tied against the PNB facility, the cash follows a set order of priority, with the PNB facility being paid first," it said.

"Given the granularity of these loans, Billease has a structural cost advantage versus traditional banks, allowing these loans to be economically feasible. This facility enables exposure in the segment, with risk being spread across many small borrowers repaying over short terms, in addition to the pool being refreshed every month," Billease added.

The company said the debt facility supports its strategy of financing its growth increasingly through local partners. "It also aligns with the company's entry into banking, following its acquisition of a rural bank, which is expected to broaden the products Billease can offer customers, including savings and deposits while further improving its funding profile and cost of capital," it said.

In June, Billease injected P500 million in capital into its rural banking arm, Rural Bank of Sta. Maria-Ilocos Sur, Inc., with another P500 million set to follow later this year.

"We are deliberately expanding our local funding base here at home, with the country's leading banks, because that allows us to keep serving more Filipinos with affordable, responsible credit," Billease Co-founder and Chief Executive Officer Georg Steiger said. "PNB coming on board is a strong signal, it says the largest institutions in the market are ready to fund this kind of lending when it is done with discipline. We have built a profitable business that scales without compromising on underwriting standards, and relationships like this let us fund that growth locally, on improving terms."

"Billease has demonstrated strong portfolio quality across different market cycles. This track record gave us confidence to establish this relationship at a meaningful scale. We see this as the beginning of a broader partnership and look forward to exploring additional opportunities to work together," PNB Executive Vice-President and Head of Institutional Banking Sector Roberto Fo. Abastillas said.

Billease, which is operated by First Digital Finance Corp., booked a net profit of P782 million last year, with revenues growing by more than 80% to P8.7 billion. Its gross loan book expanded by about 77% to P12.5 billion, while total assets reached P13.7 billion.

Source: Bworldonline