Is My Business Bank Account Protected by the FDIC?
Understand how FDIC insurance applies to business bank accounts, including coverage limits, exclusions, and ways to verify and enhance your protection.
Keeping business funds secure is a top priority, and many companies rely on banks for this protection. But not all deposits are equally safeguarded, raising an important question: does the Federal Deposit Insurance Corporation (FDIC) cover business bank accounts?
Understanding FDIC insurance for business accounts can help prevent financial surprises in the event of a bank failure.
Federal Coverage for Businesses
Business accounts at FDIC-insured banks receive the same protection as personal accounts. The FDIC, an independent U.S. government agency, automatically insures deposits placed in qualifying accounts at member banks. This coverage applies to sole proprietorships, partnerships, limited liability companies (LLCs), and corporations.
Covered accounts include checking accounts, savings accounts, money market deposit accounts (MMDAs), and certificates of deposit (CDs). Businesses can verify a bank’s FDIC membership using the FDIC’s BankFind tool. However, non-deposit investment products such as stocks, bonds, mutual funds, and cryptocurrency accounts are not insured.
If a bank fails, the FDIC either transfers insured deposits to another institution or reimburses account holders, typically within a few business days, depending on the complexity of the failure and the availability of acquiring banks.
Coverage Limits
The FDIC insures business deposits up to $250,000 per depositor, per insured bank, and per ownership category. If a business holds multiple accounts at the same bank under the same ownership category, the total coverage remains capped at $250,000. However, funds in different ownership categories—such as corporate accounts separate from sole proprietorship accounts—are insured separately.
Businesses with balances exceeding the standard limit can structure accounts to maximize coverage. One approach is to distribute funds across multiple FDIC-insured banks. Another option is using deposit placement services like IntraFi’s Insured Cash Sweep (ICS) or Certificate of Deposit Account Registry Service (CDARS), which allocate funds across a network of banks while maintaining FDIC protection.
Ownership structure affects coverage. A corporation’s deposits are insured separately from its owners’ personal accounts. Partnerships and LLCs also receive distinct coverage from personal accounts held by partners or members. Sole proprietors should note that their business funds are combined with personal accounts under the same tax identification number, which could impact total coverage.
Non-Insured Instruments
Certain financial products fall outside FDIC protection. Repurchase agreements (repos), which use securities as collateral for short-term borrowing, are not insured deposits. Their repayment depends on the financial stability of the counterparty.
Some sweep accounts also lack coverage, particularly those that transfer excess funds into investment vehicles rather than insured deposit accounts. Banks may automatically sweep funds into money market mutual funds, which are not the same as money market deposit accounts and do not qualify for FDIC insurance.
Trade finance instruments, such as letters of credit and bankers’ acceptances, are also not insured. While these tools help facilitate payments in domestic and international trade, they do not qualify as insured deposits. Businesses using these instruments should assess the financial strength of the issuing bank.
Confirming Insurance Status
Businesses should verify that their bank is an FDIC member. While most U.S. commercial banks carry FDIC insurance, some trust companies and fintech platforms do not. Some non-bank entities partner with FDIC-insured banks, but coverage only applies if deposits are legally held at the insured institution. Reviewing account agreements clarifies where funds are actually deposited.
It’s also important to confirm whether specific accounts qualify for FDIC insurance. Some hybrid accounts combine deposit features with investment elements, such as securities lending or foreign currency holdings, which may not be fully insured. Reviewing account statements and disclosures helps determine whether funds are categorized as insured deposits or exposed to market risks.
Additional Deposit Protections
For businesses with cash balances exceeding FDIC limits, additional safeguards can help protect funds.
Deposit networks spread funds across multiple FDIC-insured banks while maintaining centralized account access. Services like IntraFi’s Insured Cash Sweep (ICS) and Certificate of Deposit Account Registry Service (CDARS) allow businesses to deposit large sums while ensuring each portion remains within the FDIC limit at participating institutions.
Some banks offer collateralized deposit programs, where deposits exceeding FDIC limits are secured by government-backed securities. Businesses can also explore private deposit insurance from firms like the Depositors Insurance Fund (DIF), which supplements FDIC coverage at certain banks. These options can be useful for companies that need to maintain large cash reserves for payroll, operational expenses, or capital investments.