The Best Bank for a Startup

Best Banks for Startups Looking to Scale Up

In 2014, American Banker found that many legacy banks are still operating on systems built 40-plus years ago. That’s made it difficult for these older institutions to adapt and offer digital innovations for the current era.

It’s for that reason that the last decade has seen the rise of a fleet of neo-banks or challenger banks. Without a physical branch, these fintech startups operate using a digital platform. Since they are built using faster and lighter programming languages, innovations are aplenty, outpacing traditional infrastructure. These digital banks are rolling out everything from high-yield savings accounts to mobile debit cards, all operated on a single mobile application.

Startup banking is a necessary prerequisite for every startup; it is, therefore, critical to explore the finest startup checking accounts for startups and entrepreneurs. Every entrepreneur requires a startup bank account to pay payroll and collect financing, as well as requiring a merchant account to process credit card transactions.

Which startup checking accounts are suitable for the startup depends on the type of startup you have.

Best Banks for Startups in Silicon Valley

Founders need capital to start a startup and typically, a bank account from which they conduct their business. Several banks, thankfully, provide account services for small businesses and startups that include benefits such as minimal fees, quick mobile banking, and other startup-friendly features.

Silicon Valley Bank (SVB), Mercury, Brex Cash, First Republic Bank, and Wells Fargo are among the most prominent and highest-rated banks for startups. American Express, Bank of America, Capital One, and Chase are a few examples of the larger banks, local banks, and credit unions that offer startup banking services.

Best Banks for Startups ACH Transactions

An ACH transaction is a digital currency transfer across banks that allows money to be withdrawn from one account and 'pushed' to other banks' accounts online. External financial transfers, person-to-person transactions, startup-to-startup transactions, bills, and deposits from companies and government benefit programs are all examples of transfers.

While using ACH to send money is simple, this efficiency sometimes comes at a cost.

The good news:

You can conduct ACH transactions without incurring any fees at many banks. Some banks, on the other hand, will collect a service fee.

What Banking Features are Important for Startups?

According to a forum at YCombinator, the following features are listed as important for startup banking. We take this list and evaluate the best banks there in 2021.

Low or no minimum account balance
Integration with mobile payments providers such as Stripe and Apple Pay
Integration with Accounting Software such as Quickbooks, Xero, and Expensify
Minimal process for corporate card issuance
Ability to structure the credit line such that it is amenable to VC investments
Low or no transaction Fees

These features are important to startups because they allow for a minimal cost for optimal convenience. Integrations to pay providers, accounting software, and credit card providers will help your startup automate much of the banking process and leave your time to focus on product and customers.

Best Banks for Startups

Mercury

Description: Mercury makes bank accounts that help tech startups scale.

Best for: Tech startups

Pricing:

Standard = $0
Tea Room = $250K+ deposits ($250K+ required deposit for a “Tea Room” account which is an upgraded version of the Standard account)
Domestic wires = $5 (Free for Tea Room)
International wires = $20

Evaluation of key criteria:

Low/Minimum account balance: No minimum balance is required for a Standard Account. 1%-1.5% interest on savings accounts.
Integrations: Provides full-stack bank accounts which includes API Access, virtual cards, and team management capabilities. Also includes cash-flow analytics, programmatic payments, and instant runway estimates.
Transaction Fees: Wire Transfers are paid transactions.
Amenable Credit Line: No loan or credit line product yet.

Pros:

UI/UX is top-notch and so is the live chat support.
Opening an account only takes 30 minutes and activates in only 3-5 days

Cons:

Some bank features are not yet complete (i.e. credit line).
Inadequate customer service with fixing a user’s blocked account and deposit hold.

Brex Cash

Description: All-in-one finance for every startup.

Pricing: $0 fee to account holders

Best for: Only accepts startups that have raised at least $500K capital.

Evaluation of Key Criteria:

Low/Minimum account balance: No minimum balance.
Integrations: Integrated with Quickbooks, Gusto, Rippling, Xero, etc.
Transaction Fees: Free and unlimited ACH or wire transfers.
Minimal process: Offers a corporate card product built for startups.

Pros:

Seamless experience as they provide a way for the user to take a photo of their receipt such that it will automatically reflect their expenses.
Offers startup-friendly rewards such as discounts to recurring software subscriptions.
Higher interest rate on cash management account as the funds are stored in a low-risk government money market fund.

Cons:

Not guaranteed by FDIC since the account works as a brokerage account.
Works as a bank account replacement.

Silicon Valley Bank

Description: Grow your startup with the bank used by 50% of US-based, venture-backed tech and life science startups.

Best for: Early-stage startups

Pricing: $0 fee for the first three years but $50/mo thereafter.

Evaluation of Key Criteria:

Low/Minimum account balance: No minimum balance requirements.
Integrations: With exclusive offers from partners such as AWS, Zoom, Vouch, and Salesforce. May be used to sync with accounting software such as Quickbooks, Expensify, and Xero.
Transaction Fees: Unlimited free wires.
Minimal process: Offers a corporate card product built for startups.
Amenable credit line: Provides guidance from startup experts, curated events, VC pitch sessions, and early-stage hiring support. Able to structure a credit line in a way that is compatible with VCs according to a forum at Ycombinator.

Pros:

Setting up the account is completely done online.
Good customer service experience.

Cons:

SVB’s website appears to be outdated. 97% of founders were unhappy with the website according to a survey.

Revolut

Description: Manage your money better with spending analytics

Best for: Made for US-based (domestic) startups with international customers.

Pricing: $ 0 to $ 140/month.

Evaluation of Key Criteria:

Integrations: Integration with accounting software.
Transaction Fees: Free account offers accounts for 10 team members only, 5 local transfers, and no international transfers. Higher volume of transactions is available on paid accounts only.
Minimal process: Fast account approval < 24 hours. Automated workflows and processes. Virtual Cards for employees.
Amenable credit line: Currently no loan offering yet.

Pros: Good and fast customer service experience.

Cons: Has a banking license, but no current accounts yet.

Bridge Bank

Description: Helps you choose the startup checking and savings solutions that are best for your needs.

Best for: Tech startups

Pricing: Not disclosed by the vendor.

Evaluation of Key Criteria:

Integrations: Can be integrated directly into your app or service.
Transaction Fees: Foreign wires = $45 per wire; Outgoing wires = $15 per wire; Incoming wires = $10 per wire
Amenable credit line: Provides unique and flexible financing options tailored for startups at every stage (Seed to Exit). Partnered with a wide range of investors on deals of various sizes, from mergers and acquisitions to corporate buyouts and IPOs.

Pros: Customer representatives are quite helpful

Cons:

The process of setting up an account is not seamless.
Xero integration is not working 100% of the time.
Mobile payment integrations such as Apple Pay cannot be integrated.
Infrastructure seems outdated to some users.
Some users tried to link Bridge Bank to Brex but it didn’t work.

Bank Of America

Description: Get access to digital tools, specialists, preferred rewards, etc.

Best for: startups of all sizes

Pricing:

Fundamentals = 200 monthly transactions, $14 monthly fee (waived with $5,000 average balance, or $3,000 minimum balance, $250 debit/credit card purchases, etc.), $12 monthly fee for additional checking account, $15/month account management, $15 for incoming wire transfers.
Advantage = 500 monthly transactions, $29.95 monthly fee (waived with $15,000 average balance, or $2,500 credit card purchases, Payroll or Merchant Services subscription, etc.), account management tools, no fees for additional accounts or incoming wire transfers.

Evaluation of Key Criteria:

Integrations: Integrated with Quickbooks, CashPro API, etc.
Transaction Fees: Free only for Platinum Honors Paid transaction fees. Rates currently running at 0.02-0.04% APY.
Amenable credit line: Provides unique and flexible financing options to startups of all sizes
Minimal process: Seamless account setup
Low/Minimum account balance: None

Pros:

Large distribution of ATMs and branches in the US.
All of their checking accounts come with account activity alerts.

Cons:

Limited transaction volume.

Wells Fargo

Description: Checking and savings accounts and credit cards for your everyday startup expenses and cash management.

Best for: All startup sizes.

Pricing:

Simple = 50 monthly transactions, $10 monthly fee waived with $500 minimum balance, $3,000 monthly cash deposits.
Choice = 200 monthly transactions, $14 monthly fee with 6 ways to waive (including $7,500 average balance, 10+ debit card purchases and more), $7,500 monthly cash deposits.
Platinum = 500 monthly transactions, $40 monthly fee waived with $25,000 average checking balance or $40,000 combined balances between checking/savings, $20,000 monthly cash deposits, interest-bearing (currently 0.03%)
Analyzed = Earnings credits offset transaction fees, $20 monthly fee, treasury management services, interest-bearing (currently 0.03%).

Evaluation of Key Criteria:

Integrations: Integrated with Quickbooks, Xero, etc.
Transaction Fees: Limited monthly transactions based on checking account type.
Minimal process: Seamless account setup
Low/Minimum account balance: None

Pros:

Large distribution of ATMs and branches in the US.

Cons:

No specific account/banking solution tailored fit for early-stage startups.
Savings rates of just 0.03-0.06% APY.

US Bank

Description: Simplify money management with startup checking that works for you.

Best for: All startup sizes

Pricing:

Monthly maintenance fee = $0-25 (can be waived)

Cost per extra transaction = $0.40-$0.50

Evaluation with key criteria:

Low/Minimum account balance: Average account balance needed to waive fee = $10,000 or more.
Transaction Fees: Free transactions per month = 150-500. Free cash deposits per month = 25-200. Limitations are based on checking account type.
Amenable credit line: Lines of credit up to $250,000 for small businesses

Pros:

A special account for Nonprofits.
Large distribution of ATMs and branches in the US.

Cons:

Service fees on the higher end

Keybank

Description: Helps startups navigate through startup decisions

Best for: All startup sizes

Pricing:

Basic = $5 monthly maintenance fee, which is waived if you maintain a $1,000 average balance per statement cycle.
Startup Interest/Rewards = 100 transactions for free every billing cycle and unlimited bill pay support, $15 monthly maintenance fee waived with either a $5,000 minimum daily balance in a startup account or a combined $15,000 balance across startup deposit accounts, commercial loans, and line of credit accounts.

Evaluation with key criteria:

Low/Minimum account balance: $25 minimum opening deposit
Transaction Fees: Up to 200 fee-free transactions, then 40 cents per item. Bill Pay and ACH transactions do not count toward the total. Unlimited incoming and 3 free outgoing domestic wire transfers for startup Rewards Checking Account
Integrations: Integrated with leading accounting solutions including QuickBooks®, Xero™, SAP, Oracle, NetSuite, Microsoft Dynamics GP and others.
Amenable credit line: Designed to provide easy access to funds, lines of credit allow startups to borrow, pay back, and re-borrow funds as needed, making them the ideal solution

Pros:

1,100 KeyBank locations across 15 states.

Cons:

Startup Rewards requires an average daily balance of $7,500, or $20,000.

Chase

Description: Broad range of financial services, including personal banking, credit cards, mortgages, auto financing, investment advice, small business loans and payment processing.

Best for: Startups and entrepreneurs

Pricing:

Total = 100 monthly transactions, a monthly fee of $12 when enrolled in Paperless Statements or $15 for paper statements, waived with $1,500 minimum balance, $7,500 monthly cash deposits.
Performance = 350 monthly transactions, $20 monthly fee waived with $50,000 average balance, $20,000 monthly cash deposits, 2 domestic wires per month.
Platinum = 500 monthly transactions, $95 monthly fee waived with $100,000 average balance, $25,000 monthly cash deposits, unlimited electronic deposits and incoming wires, 4 outgoing wires per month

Evaluation with key criteria:

Low/Minimum account balance: Maintain a minimum daily balance of at least $2,000 in your account as of the beginning of each day of the statement period.
Transaction Fees:

Chase startup Complete Banking℠: 20 teller/paper transactions; $0.40 each after

Chase Performance startup Checking®: 250 teller/paper transactions; $0.40 each after

Integrations: Integrated with third-party payment services as well as Chase QuickDeposit.
Amenable credit line: Chase startup Line of Credit is ideal if your startup needs easy access to cash for short-term capital, inventory purchase, supplier payment or an emergency.

Pros:

Large distribution of Chase ATMs and branches in the US.
Mobile app is user-friendly.

Cons:

Savings rates range from 0.05-0.15%.
Limited monthly transactions based on checking account type.

NorthOne

Description: NorthOne is an FDIC-insured startup banking account trusted by 190,072 startups across America.

Best for: small businesses and Freelancers

Pricing: $10/month

Evaluation of Key Criteria:

Low/Minimum account balance: Minimum opening deposit requirement $50.
Transaction Fees: $15 for every Domestic Wire Transfer. There's no limit on the number of payments you can send, transfers you can make, or income payments you can receive.

Cash withdrawal limit: up to $2,000

Mobile deposits: up to $20,000

ACH transfers: up to $10,000

Wire transfers: up to $10,000

Integrations: API connectivity to PayPal, Square, Shopify, Quickbooks, Xero and more.
Amenable credit line: Available

Pros:

Low fees.
Unlimited transactions.
Budget for major expenses with sub-accounts.
Low minimum initial deposit requirement.
Extensive integration with small business tools.
Invoice directly from your checking account.
Extensive ATM network

Cons:

Debit cards not available for employees.
Limited phone contact.
No paper checks.

Best Banks for Tech Startups

If you're looking for the right bank for your tech startup to use for startup checking accounts, we recommend Mercury as your go-to service. Mercury's goal is to assist tech firms to scale effectively by delivering a viable financial framework for both financed and bootstrapped startups, as well as real-time financial intelligence and operational efficiency solutions. We are a partner with Mercury and recommend them to our customers. With that, we do earn affiliate revenue when you use the link below.

Sign up with Mercury

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