Incorporator The Journal of U.S. Formation
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Editorial 7 MIN READ

The 2023 bank-selection map for a freshly formed entity

First Republic, Signature, SVB, JPMorgan Chase, and the fintech middle where most new LLCs actually land

The Editors
Staff, Incorporator.org
7 min read Updated
Contents 7 sections
  1. The four banks that matter for new entities
  2. The fintech middle (and what it actually is)
  3. FDIC coverage, and what to do above $250,000
  4. What the account-opening desk will actually ask for
  5. The crypto-adjacent carveout
  6. What to actually do in week one
  7. Sources

business bank account is the first thing a new entity does after it has an EIN and a signed operating agreement, and the 2023 menu is more fragmented than it has ever been. Four chartered banks and two neobank front-ends cover most of what a freshly formed LLC or corporation will actually use, and the choice between them is less about interest rates than about who will pick up the phone on a Tuesday.

This piece is a field guide, written for a founder opening an operating account in the first quarter of 2023. It does not cover personal banking, merchant processing, or lending. It covers the deposit account that receives your first customer wire.

The four banks that matter for new entities

JPMorgan Chase Business Complete Banking is the default for a reason. Branch coverage in every major metro, same-day wires, a working mobile deposit flow, and a KYC process that will tolerate a two-week-old Delaware certificate. For a single-member LLC running a consulting practice, this is the path of least resistance and should be the null hypothesis.

First Republic is the bank most tech operators and their lawyers will nudge you toward once the company has a few employees or any kind of high-net-worth founder exposure. Its pitch is private-bank service at a commercial-bank price: a named banker who answers email, fast wire cutoffs, and a willingness to extend modest credit against a personal relationship. First Republic's deposit growth through 2022 reflected that pitch. It reported total deposits of about $176 billion at year-end 2022 in its January 13, 2023 earnings release, up from $156 billion a year earlier. The service model is real; it is also why the fee menu is thinner at the margins than at Chase.

Silicon Valley Bank is the default for venture-backed startups and has been for three decades. If your cap table has institutional investors, they will ask whether you bank at SVB, and if you do not, your next wire instructions will list SVB anyway because half your portfolio peers bank there. SVB's strengths are venture debt, bridge lines timed to a next round, and a product team that understands what a SAFE is without an explainer call. Its weakness is the same weakness most industry-concentrated banks carry: when the sector sneezes, the deposit base sneezes with it.

Signature Bank is the fourth name a new entity will hear, and only in two narrow contexts. The first is New York commercial real estate, where Signature has been a core lender for two decades. The second is digital assets. Signature runs Signet, a 24/7 dollar-payments rail that settles on a private blockchain, and a non-trivial share of US-based crypto exchanges and OTC desks clear dollar payments through it. If you are forming a plain-vanilla software company in 2023, you will not bank at Signature. If you are forming anything that touches stablecoins, you will hear its name within a week.

The fintech middle (and what it actually is)

Mercury and Brex are what most venture-track founders actually open first, often before they open anything at a chartered bank. Both are worth understanding as products, because they are often described as banks and are not.

Mercury is a financial-technology company. Deposits placed through Mercury are held at partner banks, primarily Evolve Bank and Trust in Tennessee, with Choice Financial Group as a secondary partner. The Mercury account you see in the dashboard is a ledger entry against a deposit at one of those banks. FDIC insurance attaches at the partner bank, per depositor, up to the $250,000 standard limit under 12 U.S.C. § 1821(a)(1). Mercury advertises expanded coverage through a sweep network that spreads balances across multiple FDIC-insured institutions, which is a real product and not a marketing figure, but the mechanism is a sweep, not a single-bank higher limit.

Brex operates similarly on the cash-management side. Brex Cash, the business-deposit product, sweeps customer funds into program banks (Column N.A. is the commonly cited anchor in 2023 disclosures, alongside other partners), and the FDIC coverage runs through those program banks rather than through Brex itself. Brex's core business is its corporate card, which is a Visa commercial product issued by a bank partner, and which runs on a charge-card model with automatic daily or monthly repayment.

The practical consequence of the partner-bank model is not scary. Your money is still insured, your wires still clear, and your statements still reconcile. The consequence that does matter: if you need a loan, a letter of credit, a cashier's check notarized in person, a large cash deposit, or a banker to sign off on a SBA-adjacent product, you are going to need a relationship at a chartered bank anyway. Many founders end up running Mercury or Brex for their software-stack convenience and a parallel account at Chase or First Republic for the physical-world operations.

FDIC coverage, and what to do above $250,000

The $250,000 limit is per depositor, per insured bank, per ownership category. For a single LLC with one operating account, that cap is a single $250,000 number, not a per-account number. If you keep $800,000 in an LLC's operating account at one bank, $550,000 of it is uninsured.

The two standard answers are ICS (IntraFi Cash Service) and CDARS (Certificate of Deposit Account Registry Service), both run by IntraFi. ICS sweeps balances into demand-deposit accounts at other network banks in $250,000 increments, keeping each slice within the limit while the customer continues to see a single account. CDARS does the same for CDs. First Republic, Signature, and many community banks offer ICS as a treasury product; Chase and SVB handle large-balance coverage through their own sweep programs and repo-style overnight products. Ask specifically, and ask in writing. The 2022 rate environment has pushed a lot of operating cash into overnight sweeps that are not FDIC-insured but are Treasury-backed, which is a different risk profile and should be an explicit choice.

Below a few million dollars, the cleanest answer for most new entities is: keep operating cash at one bank, ladder short Treasuries for anything you do not need within 90 days, and revisit when the balance outgrows the simple model.

What the account-opening desk will actually ask for

Every KYC package for a US business deposit account in 2023 contains the same documents, though the order of the forms varies.

The entity-level documents are the EIN confirmation letter (IRS Form CP 575 or a Letter 147C if the 575 has been lost), the filed Articles of Organization or Certificate of Incorporation from the state of formation, and the operating agreement (for LLCs) or bylaws and authorizing resolution (for corporations). A certificate of good standing is sometimes requested for entities more than a few months old, and routinely requested for out-of-state operating accounts.

The beneficial-ownership documents are where the friction lives. Under the FinCEN Customer Due Diligence Rule at 31 C.F.R. § 1010.230, every covered financial institution opening a new account for a legal-entity customer must identify and verify each beneficial owner holding 25% or more of the entity and one control-person who exercises significant managerial authority. The rule has been in force since May 11, 2018, and every opening banker has run its intake script hundreds of times. For a single-member LLC, the beneficial-owner list and the control-person list are the same person. For a two-founder C-corp with a standard founder split, both founders are beneficial owners and one is the control person. Have government-issued IDs, residential addresses, and social security numbers ready for each person named.

The CDD Rule is a separate regime from the Corporate Transparency Act's beneficial-ownership information reporting, which is in a different part of FinCEN's rulebook and is not yet in effect for reporting. Banks routinely conflate the two in explainer materials. If the opening banker starts describing "BOI filings," they are mixing the bank rule with the entity-reporting rule. The bank rule is what applies to opening the account.

The crypto-adjacent carveout

On January 3, 2023, the Federal Reserve, FDIC, and OCC issued a joint statement on "crypto-asset risks to banking organizations," flagging concentration risk, liquidity risk tied to stablecoin depositors, and the volatility of funding sources that behave differently from commercial deposits. The statement did not prohibit any activity. It did tell examiners what to look for, and it signaled that the agencies intend to treat crypto-concentrated deposit books as a supervisory concern rather than a novelty.

The practical read for a new entity in 2023: if your business model touches digital assets, expect the KYC conversation to take longer, expect the bank to ask pointed questions about flow of funds, and expect some banks to decline the account entirely. Signature, Silvergate, and a handful of others have historically served this segment; that list is shrinking, and terms are getting stricter. Build the banking plan before the product plan assumes a specific rail.

What to actually do in week one

Open the operating account at Chase or, if you have the relationship, First Republic. If the entity is venture-backed, add SVB at first cash infusion. Run the Mercury or Brex account in parallel if you want the software; do not rely on it as your only rail. Keep a spare banker's phone number, and keep your operating agreement in the same drive folder as the EIN letter, because someone is going to ask for both at the same time.

The bank you pick in month one is reversible; the account number you put on your first invoice is harder to change than you think. Pick with that asymmetry in mind.

Sources

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