The 8 Best Banks for Startups
Searching for a bank as a startup is hard. You might be met with a lack of interest from bankers if you’re not viewed as profitable enough yet, have to jump through hoops with compliance documentation, or meet onerous minimum balances. Here are the eight banks best suited to startups.
Raise a seed round. Build out an MVP. Bring in your first engineering hire. Building a startup is tough, and these are just a few of the to-dos you have to tick off if you aspire to reach unicorn status.
One of the other fundamentals your startup needs to succeed is the right business bank account to facilitate your financial operations.
More than just a digital purse where you collect and pay money from, the right startup bank can help you manage your company’s cash flow, earn interest, and save on the charges that traditional business banks are notorious for.
Here's a breakdown of the best banks for startups—their pros, cons, and how to choose the best option.
What should a startup look for in a bank?
Before we dive into the options out there, it’s essential to create a picture of what you should expect from a bank. Consider what’s most important to your operating structure.
Account opening, monthly maintenance fees, wires, minimum balance requirements, overdraft, credit and debit cards, etc. Legacy business banks have perfected the art of charging for every minor add-on to their services.
Now, this might not seem like much at first, but given the volume of transactions startups process, transaction fees quickly add up to several thousands of dollars annually. And although minimum balances are not fees in the traditional sense, it is money you have to tie up for the privilege of using a bank’s service.
An ideal bank for a startup should charge as few fees as possible to enable you to maximize your cash to pursue growth.
Beyond just a place to stash your cash, it helps if your startup’s business bank account functions as a business support tool.
So, when shopping for a startup bank, research the additional features they offer (on top of basic cash management), such as earning interest on your balance, chip-enabled debit cards, bill pay, spend analysis tools, and transaction alerts.
A startup bank that offers robust features can help you manage your startup’s finance ops right in one place versus having to pay for and integrate tens of additional apps.
Some banks may not charge any fees on features like domestic wires but instead put a meager limit on free transactions (say, 5 per month), and you’ll incur charges on any transactions exceeding the limit. Think of it as an evil twist on the freemium model.
When shopping for a bank for your startup, it’s wise to keep your eyes peeled for transaction limits and weigh up the charges you’ll incur beyond those limits to determine whether they’re justifiable.
Ease of account opening
Don’t be surprised if you walk into a physical bank location and get asked to bring an array of documents just shy of your grandfather’s birth certificate and your cat’s mugshot. Nothing personal—just AML & KYC regulations.
On the other hand, modern startup banks simplify the banking process so customers can sign up via email and provide details such as an EIN and other information required to complete the KYC process entirely online.
And for the record, how a bank’s sign-up process is structured is often an indicator of how streamlined the ongoing banking relationship will be.
Ease of use
Before committing to any startup banking partner, your due diligence should include taking their services for a spin to see how well it works for you before switching to it full-time. That includes the user experience on both web and mobile applications, where their cards are accepted, and the network of branches and ATMs you have access to.
Gone are the days when you had to queue up at the bank and write off an entire day to resolve a single issue with your business bank account. Most banks now offer digital banking services that empower businesses to make and receive payments, lodge checks, manage their budget, and control employee spending via a mobile or web interface.
An ideal startup bank should have an excellent customer support system designed to resolve issues or at least provide timely actionable updates to customers.
Again, how long it takes to hear back (via email or phone) when you’re still shopping around is often a pointer to what the ongoing relationship with a bank will end up looking like.
Best traditional banks for startups
Within the bracket of banks that cater to the needs of startups, we have two distinct categories.
- Legacy banks that have adopted services designed to serve the startup niche, and
- Startup-focused banks built from the ground up to meet the needs of startups
Here’s a breakdown of the best traditional banks that have adopted startup-friendly policies designed to help startups manage their business finances more efficiently.
For startups and small businesses alike, Chase offers business checking and savings accounts, card payments via a physical terminal, and access to the Chase Ink line of business credit cards.
Using the Chase mobile app, you can keep a finger on your company’s financial pulse, collect payments, and settle suppliers via Chase Bill Pay. Using Chase Quick Deposit, you can lodge checks electronically without needing to head to the bank, further simplifying the banking experience for your startup.
While Chase has done a great job integrating with their credit offerings, at a glance, it’s easy to see they’re targeting brick-and-mortar small businesses more than startups.
Chase’s 3.5% + 10c charge on card transactions might not seem like much, but when you’re processing hundreds or thousands of micro-transactions (SaaS or e-commerce), Chase starts eating into your profits vs. using Stripe or Adyen.
Likewise, Chase doesn’t integrate with Xero, QuickBooks, or any of the apps you already have in your finance stack. Simply put, Chase is an old bank trying to look new and doing a lousy job at it.
Bank of America
If you’re just shopping for a bank that offers you a checking account, payment processing, and credit facility, Bank of America might be it for you.
Bank of America offers a more modern banking service with integrations with your tech stack —Google Workspace, Expensify, TurboTax, QuickBooks, etc.,—coupled with robust insights that offer a 360-degree overview of your financial performance.
Bank of America’s credit cards offer reasonable interest rates, generous cashback, travel rewards, or competitive APRs for your startup, depending on what you need.
While Bank of America makes a strong pitch for being a startup’s bank, there’s still a lot to be desired. Bank of America lacks the suite of payments and expensing tools a modern startup needs to manage its payments operations.
Wells Fargo offers a suite of services targeted at small businesses and startups, including FDIC-insured checking accounts, business savings accounts, business financing, payments processing, and online banking via their web or mobile apps.
Whether you’re just looking for something that plugs into your accounting software, a basic account to manage an online business, or a new business of any sort, Wells Fargo does a great job with that. Wells Fargo’s services for small businesses and startups are competitive enough when placed side-by-side with other legacy banks of their caliber.
Despite their push to support startups, Wells Fargo offers little direct value you can start leveraging out of the door. With no integrations with your finance stack or competitive spend management, you’ll find it hard to run your business finance cohesively and manage the cash flow out of your account.
Capital One offers small business banking that early-stage startups can leverage, with free checking accounts built out with the basics, business credit cards, Online Bill Pay, and unlimited business transactions.
Free business account maintenance and a decent lineup of business credit cards with reasonable rewards can be a small boon for your early-stage startup while you’re still figuring out how your finances will work.
Don’t be mistaken. Capital One charges you for incoming and outgoing wires and takes a 0.1% cut for any cash deposit you make that exceeds $5,000 monthly—on their Spark Business Checking.
In other words, beyond the fancy names, Capital One has a pretty weak proposition as a bank for startups.
Best innovative banks for startups
Instead of locking yourself into an older bank whose services are stretched to accommodate startups, the smarter option would be to explore banks built from the ground up to meet the needs of startups. Find them below.
Startup banks focus mainly on:
- Checking account maintenance— often free, to compete with legacy banks like Chase, and
- Cash management with generous interest rates on your balance
But sadly, most turn a blind eye to features such as:
- Spend management, with expense cards that equip your entire team to purchase without getting tangled in expense reports
- Budgets to control employees’ access to funds and prevent overspend
- Real-time controls and notifications to show you how your startup is doing right now
- Historical data and trends to help you chart a way forward
Lola solves all these headaches in one tool.
Lola is a spend management tool designed to resolve your startup’s financial nightmares with money management, budgeting, and expense management designed to keep everyone on a budget.
Instead of giving everyone free reign on company funds, Lola serves as an operational account where you can:
- maintain a running balance,
- assign a budget to every employee,
- track expenses in real-time,
- get detailed insights on cash movement, and
- eliminate fraud and overspend.
Using this model, Lola gives your team the flexibility required to make relevant purchases but retains control with you and your finance operators.
Silicon Valley Bank
As the name implies, Silicon Valley Bank is an online bank built just for startups.
Used by approximately 50% of US-based, venture-backed tech and life science businesses, Silicon Valley Bank offers a range of services built around the startup community.
For your banking needs, SVB provides fee-free, FDIC-insured checking, 1% unlimited interest on your balance (perfect if you have a huge venture capital check), money market accounts where you can grow your cash passively, and unlimited rewards on every expense made on the SVB card.
Apart from the perks and parties it throws for venture capital LPs and startup founders and a generous helping of venture debt, Silicon Valley bank does look like another old boy trying to be hip— complete with the outdated interface. Or, quoting an SVB customer, “this website sucks.”
That should say enough, I think.
BlueVine’s banking offering for SMBs ranges from business checking accounts, invoice factoring, and a revolving line of credit that charges for your actual usage, BlueVine makes a strong pitch for the startup niche.
Along with BlueVine’s robust web and mobile banking, you get real-time access to your figures, zero fees, small business loans, Bill Pay via ACH, wires, and check, a network of 38,000+ ATMs, unlimited transactions, and 1% interest on balances up to $100,000. BlueVine offers a stack of features you can take advantage of in your company’s growth stage.
In the end, BlueVine offers just a few integrations (Xero & QuickBooks) and doesn’t sport many of the advanced spend and cash management features most innovative startup banks offer. As a result, it might only be a good fit if you’re looking for a small business banking solution vs. a startup-centric solution.
Novo’s business banking offering is targeted at freelancers, small businesses, and startups who want a modern banking experience equipped with tools designed to simplify your finance ops.
- A simple application process that they claim takes under 10 minutes
- Zero hidden fees
- Free ACH, check, and wire transfers
- Integrations with the stack of tools you already run your startup with, ranging from Stripe, Zapier, Xero, and Shopify, and
- Financial management tools like invoicing
- Bank-grade security across mobile, web, and on your physical cards
On the surface, Novo’s business banking might seem like a match made in heaven, but upon a closer look, there might be a few question marks to resolve before making the dive. First off, Novo is built on top of Middlesex Federal Savings, a Massachusetts-based bank founded in 1890.
Given they’re essentially a third-party in the banking chain, long support delays are not unheard of, and given that this might tie up some part of your operating capital, it might not be a risk you’re willing to take.
Your startup needs more than just fee-free accounts
Whether you’re early-stage or high-growth, Lola enables you to create a budget, manage it in real-time, empower employees to spend what they need.
In other words, you can finally create a budget, stick with it, and run your business without giving everyone access to your business bank account. Or worse, logging in 50 times daily to approve yet another vendor payment.
Think of Lola as a non-bank alternative for your startup’s banking needs.
Lola transforms the banking experience for your startup so you can focus on building great products, scaling, and taking over the world.
Learn how Lola can transform your startup’s financial experience—from budgeting to smarter spend management—in one click.