After SVB and Signature Failures, What Small Businesses Should Look for When Choosing a Bank
SVB and Signature's collapse could make small business owners reconsider where to keep their money.

Sunday's announcement by federal regulators stated that they will now cover deposits made at Signature Bank and Silicon Valley Bank by customers up to the full amount, instead of the $250,000 limit.
Small businesses can find it difficult to choose a bank.
These are some tips to help you choose the best one.
Silicon Valley Bank is the place to go for small businesses who have been saving their money.
Last week, the building collapsed
The good news is that
They will be made whole
Signature Bank customers, who were also affected by the same thing, are similarly entitled to the same.
Sunday shut down by regulators
.
They now have to find another place for their money, and small businesses may be at risk of the same fate.
"They are probably thinking that they need to use bank where their deposits are safe and that they won’t have to go through this again," stated Douglas Boneparth (certified financial planner), president of Bone Fide Wealth, New York.
Boneparth, who is a member of CNBC's Board of Directors, stated that "I know there are many regional and smaller banks in fine financial health" and that he would love to establish new relationships with small businesses.
Financial Advisor Council
"But many people will instinctively go to the banks of big names."
The catalyst was a 'bank run" on SVB
SVB collapsed after it informed investors Wednesday that it needed $2.25 billion in capital to stabilize its finances. This news sent the stock price plummeting and panic-inducing withdrawals swiftly followed. It was a "bank run". The bank was shut down by regulators on Friday, and its deposits were seized.
Bank accounts are not generally available.
Covered up to $250,000
per depositor
per ownership category
The Federal Deposit Insurance Corporation stated that SVB's biggest concern was money exceeding this amount. The bank primarily served venture capitalists and startups within the U.S. and in the local region. As of December,
Uninsured deposits accounted for 95% of bank deposits
.
On Sunday, however, regulators approved a plan that will ensure SVB clients -- just one week ago, the 16th-largest national bank -- get their deposits back. Signature Bank customers who also withdrew large amounts of money also qualify for the plan.
The plan should provide some assurance for small-business clients in banking.
Boneparth stated that the message is that customer deposits will be protected for unlimited amounts if a bank goes under.
He said, "How permanent or temporary that is, that's up to us," "But, for now, this is welcome news."
FDIC coverage might be sufficient for some companies
For some small businesses, there are additional benefits.
FDIC coverage
Their bank account should be sufficient.
Boneparth stated that if a small business has less than $250,000 in deposits, it will not be an issue - other than a major inconvenience.
Consider multiple banks, check financial stability
CFP Marguerita Cheng, CEO, Blue Ocean Global Wealth, Gaithersburg, Maryland, suggested that you might also consider opening accounts at other banks depending on your business's complexity.
Cheng said that you can have a primary relationship or main relationship for payroll. He is also a member of CNBC's Financial Advisor Council. You can also have a relationship to receive cash reserves, Treasurys, or merchant accounts. Merchant accounts allow customers to pay with debit or credit card.
It is also important to verify the financial stability banks that you do business with. CFP Cathy Curtis of Curtis Financial Planning, Oakland, California, was also a member.
Curtis stated, "Look up the bank’s financial statements and ratings."
She recommends that small businesses look for banks that provide specialized services, such as a dedicated team of business bankers, merchant services, or business loans and lines of credit.
Also, make sure to ask about any fees, interest rates or monthly charges. Curtis also said that it's important to fully understand the online and mobile interfaces. Curtis asked, "Is it simple or complicated?" She said.
You can also ask other business owners which bank they have.
Curtis stated, "Find out if customers are satisfied with the customer service or business services provided."