Entrepreneur
Should You Use a Home Equity Loan to Start a Business?
Should You Use a Home Equity Loan to Start a Business? Starting a business is a risky venture, so you need to think carefully about leveraging your home to build one.
Starting your own business is an exciting endeavor full of challenges and opportunities. But to do so requires money. One convenient option is using a home equity loan, as long as you understand both the benefits and drawbacks when it comes to tapping your home equity to fund your business.
Home equity loans have grown in popularity as property values skyrocketed across the country over the past two years. Home equity lines of credit, or HELOCs, are being used at their highest levels since 2007, but they can still be a risky way to fund a new business venture.
Should You Use a Home Equity Loan to Start a Business?
“The failure rate of business startups is very high, even among entrepreneurs who meet with eventual success,” says Greg McBride, chief financial analyst at CNET’s sister site, Bankrate. “Do you really want your home — the roof over your head — to depend on that?”
How does home equity work?
Home equity is the difference between what you owe on your mortgage and the current value of your home. To calculate your home equity, all you need to do is subtract your remaining mortgage balance from the current value of your home. You build up your home equity by making consistent monthly mortgage payments over the years.
When you borrow against your home equity, you are essentially taking cash out of your house that you must pay back with interest. If your business fails and you can’t pay back your loan, you could lose your house to foreclosure, which is why there are better alternatives to fund the start of your business.
The intended purpose of a home equity loan is typically home renovations or improvements that will increase the value of your property, but they can also be used for other life expenses such as paying off high-interest credit card debt, covering college tuition or building a business.
The two most common types of home loans are home equity loans and HELOCs.
- Home equity loan: A home equity loan provides you with a lump sum of cash at a fixed-interest rate. You receive all of your funds upfront and have predictable monthly payments over the lifetime of your loan.
- HELOC: A HELOC is an open line of credit that functions more like a credit card. You can make withdrawals from your HELOC account as often as you need (you don’t receive your entire loan upfront). HELOCs, however, have variable interest rates that rise and fall depending on economic conditions, so be prepared for your monthly payments to go up and down. With HELOCs, you can typically make interest-only payments for the first 10 years of your loan, known as the draw period, which helps keep your payments low for a while.
Why is a home equity loan an appealing choice to fund the start of a business?
Home equity loans can be a good choice to fund a business venture because they have high limits and long repayment periods, which offers you flexibility when repaying your loan.
- It’s easy to qualify: If you’re a homeowner with at least 15% to 20% equity in your home, good credit and a debt-to-income, or DTI, ratio of less than 36% (but no more than 43%), you should be able to qualify for a home equity loan relatively easily.
- High loan limit: Your loan limit could be much higher than a credit card limit or personal loan as it’s secured by your property. Your loan amount will also depend, in part, on how much equity you have in your house.
- Lower interest rates: Because your home serves as collateral to secure the loan, lenders can offer lower rates for home equity loans compared with credit cards or other types of loans, which are unsecured. Right now, the average rate for home equity loans is 7.77% and average HELOC rates are at 7.31%, according to Bankrate.
- Longer period to repay loan: Being able to repay your loan over a period of 20 to 30 years gives you flexibility in your budget, and keeps your monthly payments lower over time, too.
Why using a home equity loan to start your business is risky
It’s a risk to leverage your home (which is likely your largest asset) to start a business which may have unpredictable returns — especially with a recession potentially on the horizon. Plus, as rates have crept up in the past year, home equity loan rates are no longer enticingly low, making them a less valuable financing option.
“Home equity borrowing is no longer a low-cost source of funds,” cautions McBride, who notes that HELOC rates are near 15-year highs. McBride also notes that as the prime rate rises above 7%, the variable rate is likely to increase further. “The cost of this borrowing is greater than we’ve become accustomed to, and so, too, is economic uncertainty. That’s not a good combination,” he says.
Among the more common reasons as to why it’s risky using a home equity loan to start a business:
- It puts your home at risk: Risking foreclosure is one of your most hazardous options for financing. If you can get a high enough credit limit with a business card or personal loan, then why jeopardize your home if you can’t make payments?
- It doesn’t build business credit: Just like personal credit, business credit is a measure of your business’ creditworthiness and ability to repay loans, and borrowing against your home equity won’t have any positive impact on your business credit.
- You need exceptional credit to qualify for the lowest interest rates: If you don’t have exceptional credit (a FICO score of 800 to 850) or very good credit (740 to 799), using a home equity loan may not actually save you that much money, as the best rates are only available to homeowners with so-called exceptional credit. Make sure the rates and terms you can lock in with a home equity loan are significantly better than what you can get with a credit card or personal loan. Otherwise, the savings are likely not worth putting the roof over your head at risk.
- HELOC interest rates are variable: In a rising interest rate environment, such as the one we’re in today, variable interest rates are unlikely to benefit you as a homeowner.
Better financial alternatives to fund the start of your business
There are less precarious ways to finance the start of your business than by using a home equity loan. Interest rates may be higher, but at least you’ll have peace of mind knowing that you won’t risk losing your home should your business go under.
- Business loan: A business loan doesn’t require putting your home up for collateral and can help build your business credit (make sure to confirm your lender reports your business loan to credit bureaus as not all do). There are also various types of loans available for people who have specific business needs.
- Personal loan: Personal loans are typically easier to qualify for than business loans, but they may have higher interest rates and lower credit limits. Right now, the average personal loan rate is 10.72%, according to Bankrate.
- Business credit card: A business credit card may offer you a low introductory rate, which is ideal in a high-rate environment, as well as rewards program benefits. But your credit card interest rate could be high — the current average rate is almost 20% — if you don’t already have solid credit.
The bottom line
You should avoid using a home equity loan or HELOC to start a business if you have other financing options that don’t involve using your home as collateral. New businesses have a high rate of failure, and risking your home to foreclosure isn’t worth it if you have other alternatives such as a business loan or credit cards.
Best Online Savings And Investment websites in Nigeria
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The mobile investment apps allow customers or investors to save money with the option of investing in some portfolios such as stocks, bonds, mutual funds, and the agric sector.
This article highlights the top investing apps and websites in which Nigerian entrepreneurs should plug into. but before that, i think it will be Necessary if you first of all know what Online Investment is and why it’s more preferable.
What is Online Investing?
Online investing is the act of putting money into an Online financial scheme, property, shares or commercial endeavors with the expectation of getting additional income or profit. When you invest your money online, overtime it will grow and improve your standard of living.
OR
Online investing is a method of trading in the financial market by placing orders for buying or selling the securities through the Internet. Online investing is very simple to execute but the first step is to opt for a reliable online broker or verified source where you can invest your money.
Best Online Savings And Investment websites in Nigeria
1. Opay Investment Platform
Opay OWealth Savings Investment is a platform where you can invest in Opay and get 10% annual interest returns on your investment. Unlike most conventional banking institutions, OWealth is bringing something different to the table.
Opay OWealth savings investment gives investors a 10% interest on their investment. This is higher than the highest 6% banks can offer on your investment.
However, WEMA Bank is the only bank in Nigeria that came up with an ALART investment scheme. The WEMA bank ALART was the only one that stands out among others. But Opay OWealth savings investment has come to compete with ALART in that financial space.
Opay wealth is the real deal, as any interest on your investment is payable on funds you invest in OWealth wallet once it has completed 24 hours.
Best Online Savings And Investment websites in Nigeria
What is OWealth?
OWealth simply means Opay wealth. On the other hand, Opay Owealth investment called Opay Wealth investment.
Therefore, OWealth is an investment avenue where investors can invest any amonth of money and earn 10% annual interest. If you are an investor looking for where to invest, OWealth is the right place.
Opera pay (OPay) is offering the OWealth investment scheme under the license of BlueRidge Microfinance Bank Limited. The OWealth product will be available to you once you have complied with OPay Know Your Customer process and your identity verified.
How to Invest in OPay OWealth Savings Investment
To invest in OWealth is very simple procedure. You will have to download and install OPay App on your Android or iOS phones. After you have installed the App, then create an account with OPay. Now follow the steps listed below to invest in OWealth.
- Sign in to your OPay account.
- Fund your OPay wallet account.
- Click on the OWealth icon, read the terms and conditions and accept it.
- Top up OWealth investment.
- Enter the amount you want to invest in.
- Click on the Next button.
- Then Confirm.
Finally, OPay will send you a debit alert, just click done to complete the process. If you want to see your investment, just click on the EYE icon to display your account.
2 Thrive Agric
AnotherThrive Agric is also one of the investing apps in Nigeria making waves. If you want to grow your funds while empowering farmers and driving agriculture, Thrive Agric is the real deal.
Thrive Agric is an agribusiness platform that helps the world’s biggest challenge; matching food production with the rising population. Without lifting a cutlass, thrive agric helps you retain the title “FARMER”. You can fund any of Thrive Agric available farms and allow them to farm in your stead.
Best Online Savings And Investment websites in Nigeria
In addition, Thrive Agric gives you detailed updates of the activities on your farm, from growth stages through harvest. The interesting part is that you get up to 25% profit at the completion of the farming cycle.
How To Get Started With Thrive Agric
- Download Thrive Agric app on google play
- Create an account on the platform
- Choose a Farm
- Get Updates
- Get Returns
3 CowryWise
CowryWise is a financial technology company that helps people save and invest through a mobile application.
With CowryWise you can invest in low, medium and high-risk investments. Some of these investments include Nigerian Eurobond, Mutual funds and other money market securities provided by third parties.
- Saving interest: 10%
- Investment interest – varies
How To Get Started With Cowrywise
Visit their website or Google playstore to download the Cowrywise App
- Register on the platform
- Pick your preferred plan
- Start saving and investing
4. PiggyVest
Advancing the old method of savings through piggy or native ‘kolo’, PiggyVest radicalises the form of saving in an online platform with an interest rate on it.
Piggy Vest is one of the trusted investing apps in Nigeria. It was launched on the 7th of January 2016 with the name “Piggybank.ng.” The company started as a savings only platform and continued that way for 3 years. They thereafter rebranded to PiggyVest in April, 2019.
Best Online Savings And Investment websites in Nigeria
Currently, PiggyVest App offers direct investment opportunities to users in addition to savings. With this app, you can save any money you don’t want to touch for a specific period of time. Interestingly, you can choose your term of saving. It could be daily, weekly or monthly.
- Saving interest: 10%
- Investment interest – Savings, Mutual funds, and others
How To Get Started With PiggyVest
- Visit the website or download the app to create an account
- Set up your withdrawal account details
- Enter your debit card details to activate your account and make your first deposit
5. Afrinvest/Afrinvestor
Afrinvest focuses on West African markets with activities including investment banking, securities trading, asset management, and investment research. investment apps in Nigeria
- Interest rate: Varies
- Investments: Investment banking, Treasury bills
How To Get Started With Afrinvest App
- Download Afrinvestor app on their website or playstore
- Sign up and verify your details using the link sent to your email
- Begin your investment journey by selecting the account that best suits your personal or business needs
6. I-invest
I-invest is a pan African inter-brokerage service firm in partnership with Sterling Bank Plc. The platform helps both new and experienced investors match their investment maturities to their needs.
The platform also covers West African market with the risk-free treasury bills.
- Interest rate: 8 – 11%
- Investments: Treasury bills
How To Get Started With I-invest
- Download the I-invest app on i-investng.com or Google play
- Register on the platform
- Log into your account
- Start investing
7. FBN Edge
FBN Edge is a product of FBNQuest Asset Management, a subsidiary of FBN Holdings company. The app allows customers and potential investors to open mutual funds accounts and track investment flows.
- Savings interest: variesInvestments:
- Money market funds, fixed income
On FBN Edge app, you can:
- Open a mutual fund account as a new customer
- Sign-up easily as an existing customer
- Top-up existing mutual fund accounts
- Purchase new mutual funds
- Redeem funds from existing mutual fund accounts
- View balances in real-time
- View your transaction history
Products On FBN Edge
FBN Edge gives you access to three of First Bank’s mutual fund products:
- FBN Money Market Fund, The maximum starting investment in this plan is N5,000.
- FBN Fixed Income Fund, The minimum starting rate for this investment is N50,000
- FBN Heritage Fund, This is suitable for investors that wants to earn greater rewards over a long term period.
8. Wema Bank Alat
ALAT is a fully digital bank designed one of Nigeria’s oldest banks, Wema Bank, to help people save more with certain interest rate. Alat.ng processing automated deposit from your account and allow you to earn as you save. Investment app in Nigeria – Wema Bank Alat alat
- Saving interest: 10%
- Investments: Savings
How To Get Started With ALAT by Wema
- Download the app on Google Playstore
- Sign up using your BVN and Phone Number
- Upload your photograph and Signature
- Set up Your ALAT Pin
- Start Saving and Investing
9. KoloPay – Savings
KoloPay is another mobile piggy bank that helps you save towards a targeted goal.
- Saving interest: 10%
- Investments: Savings
How To Get Started With Kolopay App
- Download Kolopay app on kolopay.com or Google playstore
- Create an account
- Setup your saving goals
- Start saving
- Grow your savings
10. PayDay Investor For Savings
PayDay investor is a product of ARM Investment Managers, a subsidiary of Asset & Resource Management Holding Company (ARM).
PayDay investor app helps you earn interest while investing your funds automatically on a periodic basis.
- Savings interest: 10.9% – 12%
- Investments: Savings
How To Get Started With Kolopay App
- Download PayDay app on PayDay.com or Google playstore
- Create an account
- Setup your saving goals
- Start saving
- Grow your savings
11. Wealth.ng – Investments
- Fixed Income, Stocks, Savings, Agriculture
Wealth.ng app is a self-service investment platform that makes it easy for users to invest in Treasury Bills, Stocks, Mutual Funds, and Real Estate and monitor their portfolio in real-time.
Wealth.ng is an affiliate of Sankore Securities Limited, and it is registered with the Nigerian Stock Exchange and regulated by the Securities and Exchange Commission (SEC), Nigeria.
- Interest rate (s): 10 – 14%
- Investments: Fixed Income, Stocks, Savings, Agriculture
How To Get Started With Wealth.ng App
- Download Wealth.ng app on Google playstore
- Create an account
- Setup your saving goals
- Start saving
- Grow your savings
Best Online Savings And Investment websites in Nigeria
12 Stabic IBTC App
Another app saving and investment i cant fail to mention here is Stanbic IBTC Mobile App. Basically, the platform offers investment packages to both local and foreign investors. From wealth management products to pension management and mutual funds.
Best Online Savings And Investment websites in Nigeria
The good thing is that, you don’t need to have a Stanbic IBTC Bank account to use this app effectively. You can download the app to start enjoying the mutual fund product. Meanwhile, the interest rate varies per time.
- Savings interest: 10.9% – 12%
- Investments: Savings
How To Get Started With Stanbic IBTC Mobile App
- Download the App
- Register on the platform
- Choose the product of your choice and start investing
13. CrowdyVest
As a way of promoting agriculture in Nigeria, CrowdyVest App was created. Basically, CrowdyVest mobile app matches farmers with sponsors. So, if you are looking to invest in an agricultural produce, this is the best investing app to go for.
Best Online Savings And Investment websites in Nigeria
In addition, updates are sent to sponsors in photo, text and video formats during the farm cycle and at the end of the farm cycle, the sponsor will receive a percentage of the profit after selling the harvested produce in addition to the initial sponsorship.
How To Get Started With FarmCrowdy
- Download the Farmcrowdy app on Google Playstore
- Install and sign up in the app
- Identify a farm of your choice and sponsor as many units as you can afford
14 Thrive Agric
In a bid to promote agriculture in Nigeria, Thrive Agric is one of the top mobile App that was initiated to help meet the high demand in Agricultural products, If you want to grow your funds while empowering farmers and driving agriculture, Thrive Agric is the real deal.
Thrive Agric gives you detailed updates of the activities on your farm, from growth stages through harvest.
- Savings interest: 25%
- Investments: Savings
How To Get Started With Thrive Agric
- Download Thrive Agric app on google play
- Create an account on the platform
- Choose a Farm
- Get Updates
- Get Returns
Best Online Savings And Investment websites in Nigeria
15 ZIING
Ziing is one of the investing apps in Nigeria that ease savings, simplify investing process and help you gain control over your finances. More importantly, the platform equips you with the right tools to gain financial freedom.
How To Get Started With Ziing
- Download the Ziing app on Google Playstore
- Enter your first name, last name, email address, phone number and Date of Birth.
- Upload a picture and a valid means of identification which could be international passport, driver’s license, national identity card or permanent voters card.
- Update your BVN
- Upload utility bill not older than 3 months
- Start exploring Ziing packages
16 THROVE
Throve app is a self-service investment platform that makes it easy for users to invest in US, Chinese and Nigerian Stocks, Treasury Bills, Mutual Funds, and Real Estate and monitor their portfolio in real-time.
- Savings interest: varies
- Investments: Savings
How To Get Started With Trove
- Download the “Trove” app on the Google Play Store or Apple App Store
- Complete the KYC process to begin investing.
- Buy any publicly traded equity, bond or foreign assets
17 Bamboo
Bamboo is one of the investing apps in Nigeria that helps you buy and sell hundreds of Nigerian and U.S. stocks with as little as $20. Bamboo is a member of the Nigeria Securities Exchange Commission (SEC), and the U.S. Securities Investor Protector Corporation (SIPC), so your securities are insured up to $500,000 with the SIPC. Best Online Savings And Investment websites in Nigeria. Best Online Savings And Investment websites in Nigeria
How To Get Started With Bamboo
- Download the Bamboo App on App Store
- Create an account
- Choose from hundreds of Nigerian and US stocks
- Fund your Naira and Dollar account
- start buying and selling shares
18 Carbon
Carbon is not only an investment app, it also serve the purpose of getting instant short term loans for your urgent needs and recharging airtime on your mobile phone. The app allows you to earn up to 16% annually by investing in PayVest
How To Get Started With Carbon
- Download the Carbon App on Google Playstore
- Create An Account
- Choose a plan and
- Start investing
Best Online Savings And Investment websites in Nigeria
19 Kuda Bank
20 Riby
21 Reach
22 Smart save
23 Fundall
Please before you take a decision to make any investment, contact the website of your preferred investing app to avoid being scammed.
Entrepreneur
Catering Services In Nigeria: Check Out The Top 20 Catering Service Companies In Nigeria.
If you are currently planning event or a party and you don’t know the best catering service to contact in Nigeria, keep calm this post is solely for you. As we all know there are lots of catering services out there but we are only drop 20 on this post.
In no order, Below are the top 20 catering services to check out on in Nigeria.
Top 20 Catering Services In Nigeria
Below are list of the top 20 catering services in Nigeria, they are located in Lagos, Abuja, Warri And Ogun State , Nigeria.
- Tito Cakes and Events.
- Wine and Gold Services.
- Courdeau Catering.
- S. J Abed Enterprise Ltd.
- Astoria Caterers.
- West Africa Catering Nigeria Ltd.
- Unitop Catering Services.
- Hamptons Catering Services.
- Unique Chef World
- Chef Akpan Catering Service
- ExpressFoods Catering
- TK’S Kitchen
- CyCatering Services
- Chef Mark
- Balikis Catering Service
- Food Hub Service
- Dynamics Sumptuous Catering Service
- Mr Bolicious and Grill
- De Crown Caters
- Exotic Smooth
Top 20 Catering Services In Nigeria
There are other catering services but, we are giving you this 20 base on our findings, the above listed catering services specializes on both indoor and outdoor services.
They specializes in packaging, refrigerated delivery transportation system and modern storage facility to ensure that their product get to their destinations in fresh condition.
A community-focused business is designed to improve the life of the local community. Some entrepreneurs establish these types of businesses to help their communities. Consumers also support these businesses because of the benefits they offer. Statistics show that for each $100 a person spends on a local business, $68 stays within the community. Therefore, local businesses play a critical role in economic growth. If you are inspired to start a community-focused business, here’s a guide you can use.
-
Create a Strong Foundation
If you want your business to get involved in the community, you need to build a strong foundation. This is a huge responsibility, so you need to make your business stable. The community will rely heavily on your business, and you need to have the resources to sustain it.
For starters, you need stable funding, so you should look for investors or fundraising options if you don’t have enough cash. You can also get financing from different title loan places online. Familiarize yourself with the neighborhood’s culture and needs. Spend more time with the locals or in community centers to get this info. Socially responsible companies increase customer loyalty, cultivate positive brand recognition, and attract top talent.
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Join Local Organizations
Once you have an understanding of what your community needs, go a step further and join some local organizations and groups. Most states and cities have small business networking groups or a chamber of commerce that focuses on the business community.
These networks will provide more information about the community’s needs and connect you to other business leaders. You can also join volunteer or political advocacy organizations to get first-hand experience on how you can make an impact. Use the knowledge to build a successful business in your community.
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Involve the People
For your business to thrive, you need to focus on the people. The community is a vital part of your business, so involve them in most activities. When hiring, prioritize the locals. This will improve the employment rates in your locality and boost your relationship with the community. As the business grows, you will need help to keep things running smoothly. You can recruit some skilled people in the community to work in shifts and keep the business running for longer.
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Use Social Media Platforms
Apart from interacting with people physically, you can also use the internet to your advantage. You can use platforms such as Facebook and Twitter to promote your business and let your community know about the products and services available. Social media is one of the most popular marketing channels globally. 83% of marketing specialists use it in their digital campaigns. Reach out and connect with the community through social media marketing campaigns.
Creating a community-focused business is a noble idea. Apart from earning revenue, you also help your community. Starting such a business will have a measurable impact, but you have to ensure you do it the right way. Use these tips to start off on the right foot.
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