A startup needs a bank that opens quickly, pays reliably, works with its accounting and card tools, and does not hold all of its cash in one place. One account at one bank is fine on day one. It is not enough once the company holds more cash than the deposit protection limit, or cannot survive a week without access to its money.
This guide is for founders and finance leads. It covers how to open a business account, the types of provider and when each fits, the products that matter, when a large systemically important bank is the right choice, and what the failure of Silicon Valley Bank (SVB) in March 2023 teaches about where to keep cash.
The short answer
- Open the account early. Opening a business account can take weeks, especially with foreign founders or a new holding structure. Do not wait until the first invoice or the first salary.
- Use more than one provider. Keep a primary bank and a second account elsewhere that can pay salaries and key suppliers if the first one fails or freezes.
- Know the deposit protection limit in your country and what it covers. Money above the limit at one bank is at risk if that bank fails. Some payment firms hold funds under different protection, which you need to understand.
- Match the provider to the job. A large bank for lending, cross-border treasury and credibility; a fintech or neobank for speed, cards and low-cost multi-currency payments; a local bank for local services and relationships.
- Do not chase yield at the cost of safety or access. Cash is runway. The aim is to be able to pay people, not to maximise interest.
- Control who can move money. Dual approval for payments, payment limits and separate users for each person, because payment fraud is common and fast.
- The lesson from SVB is concentration. A bank that served mainly one sector, most of whose deposits were uninsured, lost a large share of its deposits in a day or two once doubts spread. Startups that had all their cash there were exposed. Spreading cash across providers and keeping an accessible reserve costs little compared with the risk it removes.
What a startup needs from its banks
A banking setup has several jobs. No single provider does all of them best, which is why most growing companies end up with two or three.
| Job | What it means in practice | What matters |
|---|---|---|
| Hold the money safely | Operating cash, the funding round, tax and payroll money | Deposit protection, the provider's strength, access in a crisis |
| Receive payments | Customer transfers, card payments, direct debits, payouts from a payment processor | Local account details for each currency, speed, reconciliation data |
| Pay out | Salaries, suppliers, tax authorities, contractors abroad | Reliable local payments, low international fees, batch uploads, cut-off times |
| Cards and spending | Company cards, virtual cards, expense management | Limits, controls, integration with the spend platform |
| Foreign exchange | Customers or suppliers in other currencies | Exchange-rate margin, the ability to hold currencies, hedging options |
| Accounting and reporting | Bank feeds, statements, reconciliations | Direct integration with the accounting system; clear transaction references |
| Payroll and taxes | Monthly payroll runs and tax payments | Scheduled and batch payments, a separate account for tax and payroll money |
| Surplus cash | Money not needed for months | Safe, accessible interest-bearing options; no lock-up that conflicts with the forecast |
| Credit | Overdraft, credit line, card limit, venture debt, guarantees | Terms, covenants, speed, whether the provider knows startups |
| Credibility | Investors, large customers and regulators expect a normal bank | A known name, correspondent banking reach, ability to issue guarantees |
Write down which of these you need now and which in the next eighteen months. The result usually points to a primary bank for the heavy jobs (holding money, payroll, credit, credibility) and one or more specialist providers for payments, cards and foreign exchange.
Opening a business bank account
Banks must know who they are dealing with and where the money comes from. Rules against money laundering and terrorist financing require them to verify the company, its owners and its managers, and to understand the business before opening an account. This is called know-your-business (KYB) or, for the people, know-your-customer (KYC). It takes time because it is done carefully, and a new company with a foreign owner is the kind of case that gets extra scrutiny.
What banks usually ask for
- The company. Certificate of incorporation or a recent registry extract, the articles of association, the registered address and the tax number.
- The owners. The shareholders, and the people behind them who own or control the company (the ultimate beneficial owners, usually anyone above 25%), with ownership charts for holding structures.
- The directors and signatories. Passports or ID cards, proof of address, and sometimes tax residence declarations.
- The business. A clear description of what the company does, who its customers and suppliers are, and which countries it deals with.
- The money. Expected monthly volumes and the main kinds of payments, and for the first deposit, where the capital comes from: the founders' savings, an investor, a grant.
- Sometimes more. A business plan, a website, contracts with customers, bank references or tax filings for older companies.
What slows it down
- Foreign founders or owners. The bank has to verify people who live elsewhere, sometimes in person or with a video call.
- Layered ownership. A holding company owning an operating company owning a subsidiary requires documents at every level.
- A vague or sensitive activity. Payments, crypto, gambling, adult content, high-risk geographies and certain intermediary businesses face tougher checks, and some banks do not serve them.
- A thin story. A company with no website, no contracts and no explanation of expected payments looks risky.
- Mismatched details. Differences in names, addresses or share numbers between documents.
- Local presence rules. Some banks want directors or an address in the country.
How to speed it up
- Prepare one document pack with the items above, current, in the right language and with certified copies where needed. Reuse it for every provider.
- Describe the business in plain words in a short paragraph, with the main customers, how you are paid and where the money comes from and goes to.
- Apply to two providers at once. One bank and one fintech or neobank, for example. Whichever opens first handles the immediate need.
- Ask about timing at the start and which steps need a meeting.
- Open the account before the round closes. Investors wire money to an account that already exists, and the first transfer should not wait for onboarding.
- Answer follow-up questions the same day. Most delays come from a request that sits unanswered.
Timelines vary a lot. A fintech with online onboarding can open an account in days; a traditional bank for a company with foreign owners can take several weeks. Plan for the longer figure.
Types of providers
Four kinds of provider serve startups. The differences that matter are what protects your money, how fast they move, and what they can do for you beyond the account.
| Provider type | Strengths | Weaknesses | Typically a fit for |
|---|---|---|---|
| Large banks, including systemically important ones | The widest range of products: lending, guarantees, trade finance, treasury and foreign exchange. International reach and a name every investor and customer knows. Usually protected by a regulatory and resolution framework, and a proven track record | Slow onboarding and slow decisions. Less interest in very small or pre-revenue companies. Can be expensive. Service may be impersonal, with fixed products | Larger rounds, cross-border operations, borrowing, group treasury, regulated or enterprise-facing businesses |
| Local or regional banks | Close relationships, local knowledge, sometimes flexible on small lending and local programmes, and familiarity with local grants and guarantee schemes | Limited international and digital services, narrower products, weaker foreign exchange | Companies operating mainly in one country, with local lending or grants |
| Neobanks, payment and e-money firms | Fast online onboarding, modern apps, cards, multi-currency accounts, low international fees, good integrations with accounting and spend tools | Often no lending or limited credit. Funds are often held under safeguarding rules rather than a bank deposit guarantee, so you need to check how they are protected. Some accounts have limits or can be frozen for compliance reviews | Fast setup, payments and cards, foreign currencies, a second account |
| Banks focused on startups and venture-backed companies | Know venture rounds, offer credit lines and venture debt, understand startup finances and investor structures | Narrow customer base, so concentration risk, as SVB showed. Availability depends on the country | Venture-backed companies that want credit and a bank that understands their model, used alongside others |
How to choose
- Start from the jobs in the earlier section, not from the brand.
- Check the legal status and the protection. Is the provider a licensed bank, an e-money institution or a payment institution? Who supervises it? How is your money protected if it fails?
- Try the onboarding and the day-to-day use. A free trial or a small account shows how it behaves on a Monday morning when a payment is stuck.
- Test the support. Is there a person who answers, in your language, and how fast?
- Look at fees as a whole. Account, payment, card, foreign-exchange and ancillary fees together, for your actual usage.
- Plan for exit. Can you export your data and move your direct debits and payment details to another provider without disrupting the business?
Products that are useful
Banks sell many products. These are the ones that matter to a startup, and when each starts to earn its place.
Company cards and expense tools are covered in depth in Spend Management for Startups.
| Product | What it does | When it helps | Watch for |
|---|---|---|---|
| Multi-currency account with local account details | Receive and hold euros, dollars, pounds and others without converting on arrival | As soon as you have customers or suppliers abroad | Which currencies, local details or only international ones, and fees to receive |
| Sub-accounts or pots | Separate balances for tax and payroll money, a reserve and project funds | From the first employee. Keeps committed money from being spent | Whether they have their own account numbers and whether they are protected the same way |
| Company and virtual cards | Spending with limits and controls | From the first subscriptions | Integration with the spend platform; funding speed |
| Batch and scheduled payments | Pay salaries and many suppliers at once, on a set date | From the first payroll | File formats, cut-off times and approval workflow |
| Direct debit and payment collection | Collect recurring payments from customers | Subscription and recurring businesses | Fees, failure rates and settlement time |
| Card acquiring and payment gateways | Accept customer card payments online | Consumer or e-commerce sales | Fees, payout timing, reserves held back, chargebacks |
| Foreign exchange and hedging | Convert at a known rate; forward contracts to fix a future rate | When a large share of revenue or cost is in a foreign currency | The margin over the market rate, minimum sizes, and whether hedging suits your size |
| Savings, notice deposits, money market funds, treasury bills | Earn something on cash you do not need for months | When the cash balance is clearly above near-term needs | Safety, how fast you can withdraw, tax on interest and the instrument's own risk |
| Overdraft or credit line | Short-term borrowing for cash timing gaps | When payment terms or seasonality create gaps | Interest cost, covenants, personal guarantees from founders and renewal risk |
| Venture debt | A loan to a venture-backed company, often with warrants (a right to buy shares) | After a round, to extend runway or fund growth without selling more equity | Cost, covenants, warrants and repayment pressure if growth slows |
| Guarantees and letters of credit | A bank promise that supports a rent deposit, a customer contract or a customs requirement | Larger contracts and leases | Fees and the cash or collateral the bank wants |
| Invoice financing or factoring | Borrow against, or sell, customer invoices | Long payment terms with reliable customers | Cost, recourse and customer notification |
| Bank feeds and API | Automatic transaction data to accounting and the cash forecast | Always | Update frequency and the quality of references |
On venture debt
Venture debt can extend runway by several months for less dilution than an equity round, but it is still debt. It usually comes with repayments, financial covenants, sometimes a requirement to bank with the lender, and warrants. Take it when the business is on track and the debt gives time to reach a milestone, not as a bridge for a business that is struggling. Model the repayments in your cash forecast, and read the covenants with your lawyer before signing.
When to use a large, systemically important bank
A systemically important bank is one whose failure could damage the wider financial system. Global regulators identify the biggest international ones (global systemically important banks, G-SIBs) and national authorities identify others (domestic systemically important banks, D-SIBs). These banks face higher capital requirements, closer supervision and detailed plans for how they could be wound down or rescued without disrupting the economy. Check the current lists with the regulator in your country, because they change.
What the status does and does not mean
- It does mean the bank is subject to stricter prudential rules and that authorities have strong reasons to keep it functioning in a crisis. That makes a sudden loss of access less likely than at a small specialist bank.
- It does not mean your deposits are guaranteed. The formal guarantee is the deposit protection scheme, which has a limit. Past rescues have been decisions made at the time, not promises made in advance. In March 2023 the US authorities protected all SVB depositors through a systemic risk exception, but that was a decision taken over a weekend, not a rule depositors could rely on.
- It does not mean the bank cannot fail or need rescue. In the same month, Credit Suisse, a global systemically important bank, was taken over by UBS in a deal arranged by the Swiss authorities.
- It does not mean it will be the best bank for a startup. Large banks are often slow, expensive and indifferent to small accounts.
When a large bank is the right choice
| Situation | Why a large bank helps |
|---|---|
| Cash well above the deposit protection limit | A strong counterparty with a supervised, resolvable structure is a sensible home for a share of the reserve, alongside other providers |
| Borrowing | Credit lines, term loans and guarantees come from banks with a balance sheet to lend from |
| Cross-border operations | Wide correspondent networks, payments in many currencies and treasury services across countries |
| Enterprise and public-sector customers | Some buyers prefer or require suppliers with a well-known bank, and ask for a bank reference or guarantee |
| Larger rounds, debt or an acquisition | Escrow, custody and syndicated or structured finance need a bank with those capabilities |
| Later stage and regulated activities | Safeguarding client money, licences and audit expectations |
When it is not worth it yet
- A seed-stage company with a few people, a few payments and cash within the protection limit. Onboarding costs time, the minimum balances or fees may not fit, and the service may be poor.
- When you need modern tools, quick cards and low-cost international payments that a fintech provides better and cheaper.
A practical pattern is to open a fintech or local account for daily use, and add a large bank when the cash, the borrowing need or the customers' expectations justify it.
What Silicon Valley Bank's failure teaches
Silicon Valley Bank (SVB) was the main bank of a large part of the US venture-backed ecosystem. Its failure in March 2023 is the clearest recent example of what can happen to a startup's cash, and it happened in about two days.
What happened
| Date (2023) | Event |
|---|---|
| End of 2022 | SVB held about USD 175 billion of deposits, roughly 86% to 89% of them uninsured (the US deposit insurance limit is USD 250,000 per depositor, per bank). Its USD 117 billion bond portfolio included USD 91 billion classed as held to maturity. As interest rates rose, these long-dated bonds lost value, with unrealised losses of more than USD 15 billion on the held-to-maturity part |
| 8 March | SVB announced it had sold more than USD 21 billion of securities at a loss and planned to raise about USD 2.25 billion of new capital |
| 9 March | Customers withdrew about USD 42 billion in a day, leaving the bank with a negative cash balance. Venture investors had urged portfolio companies to move their money |
| 10 March | A further USD 100 billion was scheduled to leave. Regulators closed the bank and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. In testimony, the Federal Reserve's Vice Chair for Supervision said customers had tried to withdraw around USD 142 billion, 81% of deposits, over two days |
| 12 March | The US authorities invoked a systemic risk exception so that all depositors, including uninsured ones, would have access to their money. Signature Bank was closed the same day |
| 13 March | SVB's depositors had access to their funds again, through a bridge bank run by the FDIC |
| Sources for the figures are listed at the end. Some numbers differ slightly between sources, which is why ranges are given. Before the rescue, many startups could not be sure they could pay salaries the following week; some borrowed to cover payroll. | The lessons for a startup treasury |
- Uninsured deposits are an unsecured loan to the bank. A company with EUR 3 million at one bank has EUR 100,000 or so protected in many European countries, and the rest depends on the bank surviving or on a rescue. Know your protection limit and your exposure above it.
- Concentration is the real risk. SVB's customers were largely one tight community. When investors and founders talk to each other, they act together, and the bank's other depositors cannot save it.
- Runs are fast now. With online banking and group chats, withdrawals of a large share of deposits can take hours. A plan that starts when the news appears is too slow.
- The bank's problems may be invisible to you. SVB's risk was interest-rate losses on its bonds, which sat off most customers' radar. Signs worth watching: heavy dependence on one sector, unusually fast growth in deposits, large unrealised losses in public filings, and sudden capital raising or loss announcements.
- Do not count on a rescue. The authorities protected all depositors in 2023, but whether that was right is still debated, and it was a decision, not a rule.
- Access matters as much as safety. Even a bank that is later made whole can be closed for a weekend or more. A startup needs a second account that can pay salaries and key suppliers within a day.
- Credit lines and cards that depend on one bank fail with it. If your card programme, payroll and credit line all sit with the same provider, one event stops all of them.
- Talk to your investors. In a crisis they receive the same information at the same time. Agree in advance what you will do and how you will communicate.
- Do not overcorrect. Moving everything to a single large bank only swaps one concentration for another. The remedy is diversification and a reserve you can reach.
The cost of these precautions, an extra account and a few hours of setup, is small next to the cost of missing payroll.
Deposit protection and spreading cash
What protects your money
There are three layers, and they differ by provider type.
- Deposit guarantee scheme. Licensed banks are covered by a national scheme up to a limit per depositor, per bank. The limit is about EUR 100,000 in the European Union and USD 250,000 in the United States (verify the current figure and what it covers where you bank). Most companies are covered, but some entities are excluded, and balances at the same bank are added together.
- Safeguarding of client money. E-money and payment firms usually hold customers' funds in segregated accounts at a bank, separate from their own money. This is not the same as a deposit guarantee: if the firm fails, the funds should be returned through the insolvency process, which can take time. Ask how it works and where the funds are held.
- Investment products. Money market funds and treasury bills are not deposits. They have their own risks, such as small price falls and delays in redemption, and are not covered by a deposit guarantee.
The key point is that everything above the limit at one provider is an unsecured exposure to that provider.
A simple allocation policy
The policy below can be adapted. The goal is that a problem at any one provider cannot stop payroll or cost more than a portion of the cash.
- No more than about half the cash at one institution (adjust to your risk tolerance and number of providers).
- At least two months of salaries and key suppliers sit at a second provider that can pay on its own.
- Keep surplus cash separate from operating cash. The surplus can go into instruments that pay interest, if they can be turned into cash within days.
- Record each provider's protection (guarantee scheme, safeguarding, or none) and the date you last checked.
- Test the backup. Make a small payment from the second account every quarter, and keep its payees and limits set up.
- Review quarterly and after any news about a provider.
An invented example, in euros, for a company with EUR 2.4 million of cash and a monthly burn of EUR 100,000:
| Provider | Role | Amount | Share |
|---|---|---|---|
| Large bank | Main account, payroll, credit line | 1,000,000 | 42% |
| Second bank (different group) | Backup payroll and suppliers account | 600,000 | 25% |
| Fintech or payments firm | Daily payments, cards, foreign currencies | 200,000 | 8% |
| Money market fund or short deposits at another provider | Surplus, available within days | 600,000 | 25% |
| Total | 2,400,000 | 100% |
The second bank alone holds six months of burn, well over the two-month minimum. If the main bank were closed for a week, the company could still run. Note that most of this cash is above any single deposit guarantee limit, so the allocation reduces the damage of a failure but does not remove it. Choosing strong providers, and being able to move money quickly, does the rest.
The cost of doing this
The extra work is an additional account, a second set of signatories and approvals, and a quarterly check. Interest differences between providers are usually small relative to the cash at stake. The cost is real but modest, and it is what a bank failure punishes you for not having.
A banking setup by stage, and running it safely
What to have at each stage
| Stage | Typical setup |
|---|---|
| Incorporation and pre-seed | One business account, ideally with a fintech or a bank that onboards quickly, opened before the first investor payment. A company card. Bank feed to the accounting system |
| Seed | A second account at a different provider, funded with a payroll reserve. A multi-currency account if you sell or buy abroad. Separate pots for tax and payroll. Scheduled payments for salaries. The spend platform connected |
| Series A | A large bank added for the main treasury and any credit line. Surplus cash policy written and approved by the board. Foreign exchange process for larger currency exposures. Venture debt considered only if it fits |
| Series B and later | A treasury policy covering counterparties, instruments and limits; several banks; cash forecast linked to bank balances; multiple entities and currencies; internal controls checked in the audit |
Controlling who can move money
Bank fraud is common, and it usually works by tricking a person, not by breaking a system. A few controls stop most of it.
- Two people for payments. One prepares, another approves. For a very small team, set a limit above which a second founder must approve.
- Individual logins and strong authentication. No shared passwords. Use security keys or app-based approval where offered.
- Payment limits per user and per day. Set them to what the person needs, and raise them as a deliberate step. Keep a higher limit available on the backup account so that you can move money in an emergency.
- Confirm changes of bank details by a second channel. Calling a known number before paying to a changed account is the best defence against invoice fraud.
- Be sceptical of urgent requests. Messages that appear to come from a founder or a supplier, asking for an urgent payment, are a standard fraud pattern.
- Review the mandate. When someone leaves or changes role, remove their access on the last day. Review who can sign, and the limits, at least twice a year.
- Reconcile daily or weekly. Look at the actual transactions, not only the monthly statement.
- Keep a short bank-access runbook. Which accounts exist, who the contacts are, the helpline numbers, how to freeze a card, and who may authorise what. Store it where the team can find it in a crisis.
- Separate accounts or pots for tax and payroll. Money set aside for the authorities should not be available for daily spending.
- Know the bank's own terms. Notice periods for closing accounts, rights to freeze funds for compliance, and what triggers a review. A bank can restrict an account on suspicion, and you should know how to respond.
Common mistakes, a checklist and questions for the bank
Ten mistakes
- One account, one provider, all the cash. A single point of failure.
- Opening the account after the round is agreed. The investors wait, and so does the closing.
- Not knowing the protection limit or assuming a rescue will cover the rest.
- Treating a payments or e-money account as a bank account without checking how the money is protected.
- Choosing on brand alone. A famous bank with poor onboarding or high fees, or a cheap fintech that cannot do what you need.
- Chasing yield on money you may need within months.
- No backup for payroll. If the main account is frozen, salaries stop.
- Shared logins and a single approver, which makes fraud easy.
- Paying changed bank details without checking them.
- Never reviewing. The setup that fit at seed stage is rarely right at Series A.
Starter checklist
- Document pack prepared for onboarding (company, owners, directors, business description, expected volumes)
- Two providers applied to in parallel; one account open before the round closes
- A second account funded with at least two months of payroll and key suppliers
- Deposit protection limit and the status of each provider recorded
- Pots or accounts for tax and payroll money
- Two-person approval and payment limits set
- Individual logins with strong authentication
- Bank feeds connected to the accounting and spend tools
- A written allocation policy approved by the founders or the board
- A bank-access runbook stored where the team can find it
- A quarterly test payment from the backup account
- A quarterly review of providers, limits and signatories
Questions to ask a bank or payments provider
- Are you a licensed bank, an e-money institution or a payment institution, and who supervises you?
- How is the money in my account protected if you fail, and where is it held?
- How long does onboarding take for a company like mine, and what do you need from us?
- What are all the fees: account, payments, cards, foreign exchange, and the exchange-rate margin?
- Do you pay interest on balances, and what are the terms?
- Which currencies can we hold, and do we get local account details?
- How fast are domestic and international payments, and what are the cut-off times?
- What approval and limit controls can we set, and can we use individual logins?
- Does it integrate with our accounting software and spend platform?
- What credit products do you offer startups, on what terms, and what security do you require from the founders?
- In what situations can you freeze or close an account, and how much notice do you give?
- Who is our contact if something goes wrong, and how fast do you respond?
This is my personal view, based on general experience. It is general information, not financial, legal or tax advice.