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Finance Stack
September 25, 2020
Entrepreneurs require an average of $15,000 to start a business, and a bank account to conduct business from. Fortunately, there are many banks that offer accounts for startups and small businesses that come with perks such as low-fees, convenient mobile banking, and other perks for startups.
Some of the most popular, new entrants, and overall best banks for startups include Silicon Valley Bank (SVB), Mercury, Brex Cash, First Republic Bank, and Wells Fargo -- but this is by no means an exhaustive list. Most big banks, local banks, and credit unions also provide business banking products and services, including American Express, Bank of America, Capital One and Chase. For the sake of this article, we’re focusing our attention on the banking partners venture capital-backed startups are actively working with when they come to Zeni.
Every startup has different needs. Which bank is best for your business? Continue reading for a comprehensive overview of the best banks for startups, followed by a head-to-head feature comparison.
Silicon Valley Bank (SVB) specializes in tech startup banking; in fact, 50% of venture-backed tech and life science companies in the US bank with SVB. This is ideal for tech companies since SVB has a team that specializes in tech banking and financing.
The deep institutional startup knowledge, proactive support, and community of SVB makes it an ideal banking partner for all entrepreneurs. They hold regular networking events to connect business owners, network with potential customers, and meet potential investors, and offer a suite of global banking services for startups with global ambitions.
SVB has a product and service for startups of all sizes; from early-stage startups to later, growth-stage startups, so businesses get the banking tools and services they need every step of the way.
There are many benefits when you choose SVB business banking. These include:
SVB offers many benefits for startups and other businesses. But there are some drawbacks to this bank.
Mercury is a tech-focused bank that was built for startups. While they specialize in working with tech companies, all businesses can access a Mercury banking account.
One of the biggest benefits of Mercury is it's incredibly straight-forward offering and easy-to-use platform. Startups can sign up and gain access to a business checking and savings account, as well as a debit card, in as little as 15 minutes. Their FDIC-insured bank accounts come with API access, virtual cards, team management, and more.
Startups will enjoy Mercury’s convenient and growth-optimized platform. But Mercury offers even more benefits.
Mercury is a good option for many startups, but there are some drawbacks.
See also: 8 Best Accounting Tools for Startups
Keep in mind, Brex Cash technically isn’t a bank. Rather, they offer something called a “cash management account.” A cash management account (CMA) offers all of the features of a business bank account with fewer fees. They’ve raised a whopping $732.1 million from venture capital firms to reimagine the landscape of financial services for startups.
With a CMA, you can manage all transactions on one portal. You can make deposits, trade securities, and even write checks.
Brex Cash offers one of the most comprehensive CMAs for businesses. Here’s why.
Brex Cash is an effective banking solution for many startups, but comes with one main downside:
With its Banking for Innovators banking services, First Republic is a popular banking option for startups. Its services include access to the basic business banking needs, plus startup-specific offerings such as complimentary 409a valuation, robust online and mobile banking tools, and access to strategic advice from a dedicated banking partner.
First Republic puts an emphasis on building personal relationships with its customers, offering direct phone and email support, and going the extra mile to meet the needs of its customers. Their emphasis on providing “extraordinary customer service” truly sets them apart.
First Republic offers a competitive startup banking package, with features that resonate with founders.
For First Republic, it comes down to the costs of doing business together.
Wells Fargo is one of the most well-known banking solutions for individuals and businesses, and has a reputation as a leading small business bank. Even as a well-established financial institution, they offer many perks for startups, including an amazing small business credit card and small business loans.
They also offer different business checking accounts; for startups, the Business Choice Checking Account includes up to 200 transactions and $7,500 in cash deposits processed per fee period at no charge, created to support new and growing businesses with a steady volume of banking activity.
Wells Fargo is one of the biggest names in banking. Their devoted customers trust them for many reasons, such as:
Wells Fargo is a trusted name but not all businesses will benefit from their banking options.
See also: Startup Bookkeeping: Common Mistakes VC-Backed Startups Make and How We're Solving Them
As with most vendor and partnership decisions, the devil is in the details. This head-to-head comparison of the key features each startup banking partner brings to the table will help founders make an informed decision on the best banking partner for their business.
For clarity’s sake, we’re comparing the best checking accounts for businesses in this section (or, in the case of Brex Cash, the cash management account). The accounts being compared are:
Options for startup banking accounts range from simple checking and savings accounts, to more complex money market accounts and cash management accounts.
Silicon Valley Bank | Mercury | Brex Cash | First Republic | Wells Fargo | |
---|---|---|---|---|---|
Cash Management Account | ❌ | ❌ | ✅ | ❌ | ❌ |
Business Checking Account | ✅ | ✅ | ❌ | ✅ | ✅ |
Business Savings Account | ❌ | ✅ | ❌ | ❌ | ✅ |
Business Money Market Savings | ✅ | ❌ | ❌ | ✅ | ✅ |
Before you move forward with the application process, be sure you and your business meet the requirement qualifications to open an account.
Silicon Valley Bank | Mercury | Brex Cash | First Republic | Wells Fargo | |
---|---|---|---|---|---|
Qualifications | • Federal EIN • Most companies will qualify unless associated with adult entertainment, marijuana, or gambling |
• Business must be incorporated in US with a valid federal EIN, and in good standing • Most US companies will qualify, aside from money services businesses or businesses involved with adult entertainment, marijuana or internet gambling |
• Business must be incorporated in US with a valid federal EIN, and in good standing (sole proprietors do not qualify) | • Business must be incorporated in US with a valid federal EIN • Must not be associated with adult entertainment, marijuana, or gambling |
• Business must be registered in the US, with a business tax ID # and state ID |
Documentation | • Federal EIN • Account holder (founder/s) social security number and copy of government issued photo ID • Traction & financing details to-date, including accelerator involvement |
• Federal EIN • Account holder (founder/s) social security number and copy of government issued photo ID |
• Federal EIN • Account holder (founder/s) social security number and copy of government issued photo ID |
• Original articles of incorporation • Federal EIN • Account holder (founder/s) social security number and copy of government issued photo ID |
• Original or certified copies of your articles of incorporation • Federal EIN • Account holder (founder/s) social security number, and two forms of personal identification, one of which must be issued by a government agency |
Minimum opening deposit | No minimum | No minimum | No minimum | $5,000 | $25 |
How to apply | Initiate online or at branch | Online only | Online only | Online or at branch | Online or at branch |
International availability | • SVB has offices in the US, Ireland, UK, Germany, India, Israel, and China. • It has an international banking network in Canada, Chile, Brazil, South Africa, Australia, NZ, Indonesia, Singapore, Japan, and Europe (some exclusions apply) |
Mercury was made for US-based startups but international businesses who work in the US can also form a Mercury bank account | Available only to customers (C-corp, S-corp, or LLC) that are incorporated in the US | Available in the US only | Wells Fargo has locations around the world to help businesses succeed on an international scale, with locations across the Asia Pacific, Canada, Europe, Middle East, Africa, and Latin America regions |
New entries into the startup banking industry offer the most competitive low and no fee banking products and services.
Silicon Valley Bank | Mercury | Brex Cash | First Republic | Wells Fargo | |
---|---|---|---|---|---|
ACH | No fee | No fee | No fee | • $0.10 each credit • $0.02 each debit • Various setup fees |
$0.2 per ACH item received |
Transaction | No fee | No fee | No fee | Fees apply for most transfers; detailed breakdown unavailable | First 200 transactions included per fee period at no charge, $0.50 each thereafter |
Wire transfer | No fee, daily cap of $100K | • $5 for domestic transfers • $20 for international transfers • Free for Tea Room customers |
No fee | • No fee for incoming domestic & int’l wires • $35 outgoing domestic & int’l in USD • $25 outgoing intl in foreign currency • $12 outgoing wires via online banking |
• $15 per transfer for incoming domestic • $30 per transfer for outgoing domestic |
Overdraft | $30 per item | No fee | No fee | $30 per item | $35 per item |
Maintenance | No fee | No fee | No fee | $30/month, can use earnings credit to cover costs | $14/month, can avoid by meeting certain requirements |
Check | • $0.11 for checks deposited • $15 for foreign check conversion |
No fee | No fee | $0.10 per check deposit | No fee |
Details of each bank’s fees are available via their respective landing pages, where you can sift through the fine print:
How easy will it be to access your company’s bank account, or contact customer support about an urgent matter? Startup founders are on the go 24/7, and require a banking partner who can rise to the occasion to meet their needs.
Silicon Valley Bank | Mercury | Brex Cash | First Republic | Wells Fargo | |
---|---|---|---|---|---|
Online banking | ✅ | ✅ | ✅ | ✅ | ✅ |
Mobile banking | ✅ | ✅ | ✅ | ✅ | ✅ |
Physical branches | ✅ | ❌ | ❌ | ✅ | ✅ |
Customer support | • Phone & email, weekdays from 5am – 5:30pm PST | • General help email • Request account-specific support when logged into account |
• Phone & email, weekdays from 5am - midnight PST, weekends from 5am - 10pm PST | • Phone & email • Dedicated banking partner assigned |
• Phone & email, 24/7 |
See also: Accounting Software Comparison for Startups
It goes without saying account security is paramount when it comes to deciding where to store your startup’s cash.
Silicon Valley Bank | Mercury | Brex Cash | First Republic | Wells Fargo | |
---|---|---|---|---|---|
FDIC | Insured up to the FDIC limit of $250,000 | Insured up to the FDIC limit of $250,000 | Insured up to the FDIC limit of $250,000 | Insured up to the FDIC limit of $250,000 | Insured up to the FDIC limit of $250,000 |
SIPC | Not applicable | Not applicable | Brex Treasury is a member of SIPC, which protects securities customers up to $500,000 | Not applicable | Not applicable |
Fraud protection | Choose between per item, monthly, or per transaction fraud protection. | Zero liability for fraudulent transactions. Automatically credits account. | Zero liability for fraudulent transactions. Automatically credits account. | Clients of First Republic Bank have access to Trusteer Rapport, which is designed to protect users from financial malware and phishing attacks. | 24/7 fraud monitoring with zero liability protection for free. |
Password protection | • Requires users to verify their identity via text message or a phone call at login when high-risk activities are being performed. • Offers IBM Security Trusteer Rapport® online fraud protection software. |
• Passwords are stored hashed with the bcrypt algorithm, and plaintext passwords are never stored or logged. • Time-based One Time Passwords are used for two-factor authentication via Authy and Google Authenticator. Authentication codes are never sent via insecure channels like SMS. |
• Brex Cash enforces strong password requirements and supports mobile biometric authentication (Face ID/Touch ID). | • Provide clients with multiple Identification numbers, tokens and passwords. • Forced password change every 120 days. • Uses encryption keys for Direct Transmission Service. |
• Option to sign up for 2-step sign-in verification. |
Whether you're evaluating a banking partner for a new business, looking to change your current banking setup, this guide will help you compare the top startup banking options -- Silicon Valley Bank (SVB), Mercury, Brex Cash, First Republic Bank, and Wells Fargo -- to determine the banking partner best suited to meet the needs of your business.
While it’s important to find the bank with the best business banking features for your startup, your financial management efforts will benefit tremendously if you seek help from the experts.
See also: Startup Bookkeeping: Common Mistakes VC-Backed Startups Make and How We're Solving Them
For the rest of your startup's finance-related needs, take a closer look at Zeni. Zeni uses a combination of AI and human finance experts to maintain accurate books and manage all of the finance functions for your startup, including daily bookkeeping, ongoing accounting services, access to our finance concierge, bill pay and invoicing, budgeting and projections, and even annual taxes and CFO services.
Zeni customers also gain access to a single dashboard to see and manage their finances in real-time.
Editorial Disclosure: Zeni has business partnerships with SVB and Brex.
from our blog - the balance sheet
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