Whitefish, MT / June 05, 2014 / With the economy continuing its slow rebound, unemployment holding steady and consumer confidence on the rise, the financial lending market has seen significant surges in activity recently. This growth is facilitated in particular by the demand for access to loans online, particularly as consumers' comfort level with virtual enterprises matures. Online pioneers who have established lending platforms, both direct and peer-to-peer, are increasingly able to satisfy a full range of personal loan needs, and this activity has drawn the attention of investors looking for greater opportunity outside of the traditional banking sector. These investors are eagerly eyeing the activities of peer-to-peer giants Lending Club and Prosper, as well as the growing direct lender successes of OneMain Financial (NYSE:C), Springleaf (LEAF), and IEG Holdings Corporation (OTC Pink: IEGH).
Consumer confidence in peer-to-peer networks is already well established, built on the familiarity and popularity of internet forerunners such as Napster and eBay, Inc. (EBAY). This now-mainstream online personal business model is increasingly supplemented by the more recently developed process of crowdfunding where large numbers of individuals collectively participate as lenders in transactions as each contributes a small portion of the full amount to be invested.
Together, these technologies are hastening the transition from an online buyer-and-seller platform to an online borrower-and-lender platform. Peer-to-peer leaders like Lending Club and Prosper, for example, have carved out a niche market over recent years due to the relative simplicity of virtually connecting people who need money with people who have money.
It's not just the marketplace that has responded, either. Investors have begun embracing this approach wholeheartedly, seeking to take meaningful stakes in companies while the industry is in its infancy. Last year, Lending Club saw Google acquire a significant minority position in the company with a purchase of $125 million in stock on the secondary market, which would place the company's valuation at $1.55 billion. That's a considerable increase over the $540 million valuation the year prior, a figure which was established when venture capital firm Kleiner Perkins took a $15 million equity position in the company.
Popular as peer-to-peer networks may be, they are not the only game in town. Direct lenders, such as IEGH, which operates under the Mr. Amazing Loans brand, also have their own supporters – borrowers and investors who find a number of direct lending features to be both more comfortable and financially advantageous.
Perhaps the most frequently cited reason why many favor direct online lending is that they are reassured by direct lending's framework of specific fees and costs of loan processing. There are no surprises, and where borrowing money is concerned, surprises are the last thing that consumers want.
Nearly as popular is the fact that there are no middlemen in the direct lending process. That allows borrowers to communicate on a one-on-one basis with the primary lender. IEGH, for example, emphasizes their flexible underwriting, affordable repayments, superior service and fast online application processing as key features of their program.
Direct lending also boasts a number of supporters in the investing community. They particularly value that investment in the stock of companies like IEGH offers superior liquidity to the 3- to 5-year long-term commitment often associated with peer-to-peer lenders.
Moreover, they appreciate that whole gross margin is not diluted with direct lending, and they can point to IEGH as a prime example: the company is currently operating with a 20%+ gross interest margin compared to a typical 2% margin for peer-to-peer lenders.
These aren't the only encouraging performance numbers to come out of IEGH recently. Mr. Amazing Loans' May volumes grew by 925% to $410,001 compared to January's $40,000 and tripled April's $139,000 monthly volume. Since launching online lending in July 2013, cumulative loan volume has increased by 457% from $237,000 to $1,321,001. The rapid loan volume growth is being driven in part by new joint venture arrangements with low-acquisition-cost lead sources and aggressive state license expansion.
The future may be even more promising for IEGH. The company recently received approval for lending licenses in Georgia, Virginia, Missouri and New Jersey, expanding from the previous four states where the company operated – Nevada, Illinois, Arizona and Florida – to eight states and increasing the population coverage by 81% from approximately 42 million people to approximately 76 million people. This greater geographical reach places the company on track to hit its $1 million-per-month loan volume this summer. Bolstered by this growth, IEGH has submitted an application for Texas and plans to lodge its California license application shortly, along with additional plans to apply for 23 state licenses over the next six months, including such other large population states as New York, Pennsylvania and Ohio.
"The business of Mr. Amazing Loans is not rocket science, the growth is driven by consistent management execution utilizing our leading online loan platform combined with cost effective customer lead acquisition, thorough and highly efficient underwriting and the ability to access appropriate debt and equity funding," stated Paul Mathieson, Chairman/CEO and Founder of IEG Holdings Corporation.
Investors are eagerly watching as IEGH moves closers to its target of increasing US population coverage by a further 274% from the current eight states and 76 million people to 33 states and 284 million people, encompassing approximately 90% of the U.S. market by the end of year.
Leveraging its growth in volume, IEGH intends to up-list from OTC Pink to OTCQB upon clearance by SEC of S-1 registration statement, anticipated in August 2014. The intention is to further up-list to NASDAQ in April 2015 post completion of the December 31, 2014 audited annual report. In preparation for a NASDAQ up-listing, IEGH intends in June 2014 to effect a 1-for-1000 reverse split of its common shares, preference shares and authorized shares, followed by a 10-for-1 forward split.
Additional information about IEG Holdings and Mr. Amazing Loans is available at www.investmentevolution.com.
ABOUT IEG Holdings (IEGH)
IEG Holdings Corporation (IEGH) provides unsecured consumer loans under the brand name "Mr. Amazing Loans" via its website www.mramazingloans.com. After lending approximately $48 million to over 11,500 borrowers in Australia, the Company Founder and CEO Paul Mathieson moved to the U.S. market in 2008 to replicate the successful business model. IEGH now operates online in the USA covering all of Nevada, Arizona, Illinois, Florida, Georgia, Virginia, Missouri and New Jersey. IEGH is rapidly expanding and plans to offer loans in 33 states covering 90% of the USA population by late 2014. The Company launched advertising for its online loan origination platform in mid-2013, partnering with top lead generators in the United States. The Company's loans range in value from $3,000 to $10,000 and have a term of four to five years with a 19.9% to 29.9% APR. Significant growth is expected from the online loan origination business, which has the potential to scale much more rapidly and at a higher net margin than the previous brick-and-mortar business. IEGH intends to up-list to NASDAQ in April 2015. For more information about the Company, visit www.investmentevolution.com.
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SOURCE: Emerging Growth LLC