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How to find the right banking partner for your startup

Posted by Kanika Sinha

August 12, 2021    |     5-minute read (946 words)

A startup’s banking relationship is a crucial component of its financial infrastructure and can be a serious distraction if it is not well aligned. So, when startups choose a bank, they need a partner with a solid understanding of their business and a commitment to their long-term success.

Large national banks are accustomed to working with traditional businesses whose needs are very different from those of startups. Their rigid eligibility rules and fee structures don’t work for a fledgling new business. Some even require visits to physical branches for transactions such as wire transfers!

Meanwhile, a typical startup is a shoestring operation that operates at a loss and has no assets other than technology. Rather than working nine-to-five, they run around the clock and require on-demand access for emergencies beyond an 800 number that a traditional bank offers. And their banking needs will evolve depending on which stage they are in, from bootstrapping to different rounds of venture funding. 

Cutting through the noise to find a bank that works for your venture can be daunting. Startup founders should look for these features in a bank:

  • Robust online banking capabilities
  • A business checking account with no monthly or low monthly fees
  • At least 100 free transactions per month, with a low per-transaction rate afterward
  • Low ACH and wire-transfer fees
  • A manageable minimum daily deposit 
  • A flexible business credit line with terms that sync with a startup’s unpredictable revenue
  • A debit or credit card with good terms, preferably with rewards
  • Good customer service where you can get the banker on the phone
Know your needs

Startups sometimes take a short-sighted approach to banking, discovering as they scale up that an account that worked in the beginning is now too restrictive. It’s best to choose a bank from the start that has the flexibility to grow with you. 

Before you begin your search, think through your banking needs as to how they may extend into the future. Beyond the business checking account, you may need specialized banking services such as forex support, treasury management, accounts receivable financing, venture loans or a revolving line of credit.

The rise of digital banks

In recent years, a slew of digital banking services that aim to address the needs of startups have come to market. To attract clients and stand out from traditional banks, this new breed of entrepreneur-friendly bank may offer a dizzying array of perks, from venture capitalist pitch sessions to white glove customer service. 

But most importantly, they are willing to understand your business space and provide tailored financial services such as providing working capital, AR financing, managing treasury and flexible payouts, as your startup evolves. 

Many offer one-on-one support around the clock and access to lenders that look beyond your available assets to help secure credit. They can also facilitate connections with advisers, attorneys and other experts in your industry.

As the traditional financial systems haven’t adjusted to keep pace, digital banks are a valuable option for startups. Below you can review fees and services offered by four leading startup-friendly banks.

Comparison of banks that specialize in startups
Silicon Valley Bank First Republic Mercury Rho Bank
business checking
business savings
cash management account
business money market savings
minimum opening deposit no minimum $5,000 no minimum $50,000
ACH fee $0 $0.10 per credit $0.02 per debit misc. setup fees $0 $0
wire fee $0 daily cap $100K $0 incoming domestic, int’l. $35 outgoing domestic, int’l / USD. $25 outgoing int’l in foreign currency. $12 outgoing via online banking. $5 domestic $20 international $0
transaction fee $0 fee for most transfers $0 $0
AR financing
overdraft fee $0 $30 $0 $0
monthly maintenance $0 $30 monthly. waived with higher minimum avg. balance. $0 $0
checks $0.11 per check deposit $15 per foreign check conversion $0.10 per check deposit no fee no fee
online banking
mobile banking
physical branches
customer support phone, email M-F 5 am - 5:30 pm PT. <phone, email. dedicated banking partner. general help email. specific help when logged in. dedicated banking partner. email, live chat, call
FDIC up to FDIC limit $250K. up to FDIC limit $250K. up to FDIC limit $250K. up to FDIC limit $250K. up to $75M Treasury management acct.


Startup founders will also want to note these standout features:

Silicon Valley Bank: This iconic institution hosts webinars and networking events aimed at connecting business owners with potential customers and investors, and it claims that at least half the venture capital-backed tech and life-science firms in the U.S. are among its customers. It is the largest bank in Silicon Valley.

First Republic: Exemplary customer service is the keystone of First Republic bank, and its reputation as such is unrivaled. Real people answer its phones, customers are greeted on a first-name basis and bankers go the extra mile to meet customer needs. Business accounts are tailored to the stage of your company: early, growth or mature.

Mercury Bank: This bank for startups is backed by venture capital firm Andreessen Horowitz. Businesses with balances of $250,000 or higher are automatically enrolled in Mercury’s Tea Room program that offers free domestic wire service and other rewards. Mercury’s Raise program connects startups seeking seed funding with investors.

Rho Bank: This bank must have been designed by a former small business owner or CFO who got tired of restrictive banking rules, clunky software and being gouged by hidden fees. Rho takes it one step further and invests in its customers with innovative financing, such as the Rho Card that offers up to 60-days to pay and best-in-class 1.75% cash back. 

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