Banking for Small Business

A good bank setup for your business will help your business thrive. Whether to collect customer payments, prepare taxes, or earn money on idle cash, it can pay dividends (literally).
Written by
Kim Le
Published on
June 6, 2024

I come from the world of start-ups, particularly emerging software solutions that are changing how people work. Naturally, when I was in search for a finance solution for my small business, I turned to fintech start-ups. Having used them when I was working in start-ups myself, these solutions fit our problems like a perfectly molded glove. Their innovative solutions made traditional banks seem so broken.

But do they truly meet the needs of small businesses? After taking a closer look for ourselves, exploring various finance solutions and their offerings, we are not convinced. Take a look at what we uncovered.

What to Look for in a Small Business Finance Solution

Small business owners require robust financial tools to efficiently manage their operations. Here are the essential solutions that should be part of every small business's financial strategy.


A reliable banking solution is fundamental. It provides a secure place for the money and facilitates transactions, payroll, and other financial activities seamlessly. You're looking for low to no fees for basic checking and savings accounts. It should seamlessly integrate with payment processing platforms like Stripe, and provide ACH and wire transfers at low costs.

Ideally, multi-user administration and oversight is available to owners can issue debit cards to company users as well as monitor for fraudulent activities.

Credit Card

Credit cards are indispensable for managing cash flow. They allow businesses to extend cash availability by paying vendors on net terms and spending on credit. This flexibility is crucial for maintaining liquidity especially if businesses have longer payment terms for their Accounts Receivable.

Ideally, the credit card solution allows for oversight over multiple users and allow the company to issue cards to people in the company as needed within the limits the admins provide. If there are rewards and cash backs, that is an added bonus. However, low fees, ease of management for multiple users, and good oversight are more critical.

Treasury Management

A brokerage account that allows investing excess cash into low-risk money market funds (MMFs) can be beneficial. These funds, typically backed by government assets, offer a safe way to earn interest on idle cash. In the current environment, these low-risk, low-fee money market funds can earn ~5% annually. An example is the Vanguard fund VMRXX and VMFXX.

Note that this is an atypical offering in most business banking solutions. A comparable solution that businesses may need to consider if this solution is not available is a high-yield savings account. Some of these are matching to the returns from MMFs.

Summary of Key Features to Consider

  • Multi-user Access: Ensures that multiple team members can manage financial tasks, offering a manager account and multiple credit cards.
  • High-Yield MMF Funds: Funds that yield 4-5% annually can provide significant returns, especially with current high-interest rates.
  • Ease of Use: The solution should integrate smoothly with existing systems like QuickBooks Online (QBO) and facilitate vendor payments effortlessly.

FinTech Banks to Know

Several FinTech companies offer financial solutions tailored for businesses. Here’s an overview of some popular options and their offerings.


Brex, a neobank, has positioned itself as a standout in the fintech landscape. Their corporate credit card comes without personal guarantees, and their cards are specifically tailored for business spending, offering higher points for categories like travel and dining, and even on software subscriptions—a real advantage for tech-focused businesses.

Better yet, it has expanded into offering cash accounts with is a hybrid of checking and MMF account letting businesses seamlessly move funds between a checking account and a money market account. It has an easy to use UI for ACHs, wires, and e-checks. It also has alerts and automatics

Offerings: banking (cash management accounts), treasury management built into bank accounts. Also offers credit cards and expense management.

  • Minimum Requirement: None, but financials are needed for business evaluation.
  • Why We Like It: Does everything, and does most of it well.
  • Why We Don't Like It:
    • Not ideal for businesses that don't spend much on recurring expenses like marketing or software subscriptions as these categories earn the most rewards.
    • High account fees may also be a deterrent for small businesses.
    • No longer supports small businesses. They are only working with venture-backed start-ups.

Mercury Bank

Mercury Bank is another darling in Silicon Valley with its name cropping up more in competion with Brex. However, as a neobank it still has a lot to do in order to grow into its vision. Most recently, it's banking partner Evolve and Synapse is going through litigation that brings into question Evolve's banking practices.

Offerings: Banking (Checking and Savings), Treasury Management (for accounts >$500K).

  • Minimum Requirement: $500,000 in deposits to access treasury management features.
  • Why We Like It: Modern interface and high-yield treasury options.
  • Why We Don't Like It: Limited banking features compared to other options, and high minimum deposit requirement for treasury management.


Ramp offers corporate cards with spend management, expense tracking, and integrations with accounting software. Ramp recently announced its $150M Series D-2, which makes it a solid option for businesses. At least, its cash coffers are stocked for the foreseeable future.

Offerings: Credit Card only.

  • Minimum Requirement: $75,000 in linked bank accounts.
  • Why We Like It: Slick web-based UI, modern feel, ease of use, and analytics and data export. Offers 1.5% cashback on all purchases without any specific category limitations. Significant automation features to streamline oversight.
  • Why We Don't Like It: Only offers a credit card, and the company must have $75k in linked bank accounts to be eligible.


Divvy, now part of, stands out by offering a robust expense management platform coupled with a corporate credit card, designed to help businesses monitor, manage, and optimize their spending. As part of, the leading AP system for small to medium sized startups, Divvy’s corporate card solution is the missing link for corporate expense management.

Offerings: Corporate credit card with budgeting and expense management tools.

  • Minimum Requirement: None.
  • Why We Like It: No fees, easy approval process, customizable budgeting and expense management tools. Also offers a free cashback rewards program.
  • Why We Don't Like It: Credit card only. Expense management not as needed for small businesses. Only available for companies with US-based bank accounts. Must have $20K in cash bank accounts to apply. More traditional underwriting process for cards, and requires going through a sales funnel.

Karat Financial

Karat Financial is a credit card company this is built with influencers in mind. It takes a unique underwriting approach of looking at how many followers applicants have on different social media platforms. They think of the monetization potential of influencers. They are backed by celebrities and angel investors as opposed to institutional investors.

Offerings: Credit Card only.

  • Minimum Requirement: Personal guarantee required.
  • Why We Like It: Streamlined credit solution specifically designed for small businesses.
  • Why We Don't Like It: No rewards program currently available, limited to credit card only. Personal Gaurantee required. Meant for influencers not small businesses.


Relay is a neobank that services small businesses. Their differentiation is a focus on cashflow management for small businesses that often suffer from insolvency and lack of financial oversight. Relay announced a Series B raise of $33M in May 2024.

  • APY: 1-3%. Earn 1% APY for balances up to $50,000; 3% for balances over $1M.
  • Why We Like It: Promising banking solution with competitive interest rates, though lacks credit card and advanced treasury management offerings.
  • Why We Don't Like It: Only recently raised its Series B. Uncertain future outlook.

How FinTech Start-ups Are Failing Small Businesses

While these FinTech start-ups offer innovative solutions, they often fall short in serving the broader small business community. Here’s why:

Start-ups Backing Start-ups

From a strategic standpoint, FinTech companies often design solutions that cater to venture-backed start-ups and high-growth companies. This focus makes sense as these companies face similar challenges and are better equipped to create effective solutions.

Small Businesses are Underserved

However, this approach leaves tens of millions of small businesses underserved. The primary reasons are:

  • High Failure Rate: Small businesses have a higher risk of failure, making them less attractive for FinTech start-ups that seek stable, high-growth clients.
  • Low Capital Funds: Small businesses typically operate with tighter budgets, which may not meet the minimum requirements of many FinTech solutions.

Traditional Solutions Might Be Better

Through our research and discovery process, we’ve realized that traditional financial solutions, although more cumbersome, might be a better fit for small businesses. Traditional banks and financial institutions, despite their slower adoption of technology, offer long-term stability and a range of services that can be more comprehensive.

Our Take

While FinTech start-ups bring innovative and modern solutions to the table, they often fail to address the unique needs of small businesses. Small business owners should carefully evaluate their options and consider traditional financial solutions that might offer a better fit for their specific needs.

Interested in exploring more about how to manage your small business finances effectively? Sign up for our newsletter where we dissect the businesses of real-life small businesses and startups, including our own.

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