Are Business Accounts FDIC Insured?
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The Federal Deposit Insurance Corp. (FDIC) covers most types of business bank accounts, including business checking, savings and money market accounts, for up to $250,000.
This coverage is automatic as long as your deposits are held at an FDIC-insured bank. Should that bank fail, the FDIC will pay out your deposit plus any accrued interest, up to the insured limit. Business accounts at credit unions have similar coverage through the National Credit Union Administration (NCUA).
Here’s everything you need to know about eligibility, ownership types and FDIC business account limits, including how to gain additional coverage.
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American Express® Business Checking
1.30%
Business account types eligible for FDIC coverage
FDIC insurance applies to deposit accounts. Other types of accounts, such as investments or Treasury bills, have other forms of protection. Investment accounts, for example, are typically insured by the Securities Investor Protection Corporation (SIPC). And U.S. Treasury bills are backed by the U.S. government.
Eligible | Not eligible |
|---|---|
✖ Stock investments. ✖ Bond investments. ✖ Mutual funds. ✖ Crypto assets. ✖ Life insurance policies. ✖ Annuities. ✖ Municipal securities. ✖ Safe deposit boxes. ✖ U.S. Treasury bills, bonds or notes. |
Business cash management accounts typically offer a mix of deposit and investment accounts, including checking, savings, money market deposit accounts, stock investments and Treasury bills.
Insurance coverage for these types of accounts will depend on where funds are allocated. Money held in a business savings or money market account, for example, will have be FDIC insured, whereas funds held in investment accounts or Treasury bills will be backed by the SIPC or U.S. government.
FDIC insurance limits for business accounts
The FDIC insurance limits are not per account, but rather per depositor. The standard FDIC insurance coverage is up to $250,000 per depositor, per institution, per ownership category. Ownership categories include:
Ownership type | FDIC coverage limit | |
Single account | Owned by one person; no named beneficiaries. | $250,000 per owner (aka depositor). |
Joint account | Multiple owners with equal access to make withdrawals. No named beneficiaries. | $250,000 per co-owner. |
Corporation, partnership and unincorporated association accounts | Owned by a legally organized for-profit or nonprofit company or organization, including LLCs, C-corps and S-corps. | $250,000 per corporation, partnership or unincorporated association. |
Trust account | Single and joint accounts with named beneficiaries, including revocable and irrevocable trusts. | $250,000 per depositor per unique beneficiary. |
Employee benefit plan account | Run by a plan administrator rather than individual participants. Includes pension plans, defined benefit plans and other employee benefit plans. | $250,000 per plan participant. |
Certain retirement account | Individual retirement accounts and some self-directed plans, including 401(k), profit-sharing and Keogh plan accounts, that are held at an FDIC-insured financial institution. | $250,000 per owner. |
Government account | $250,000 per official custodian. | |
Business bank accounts for sole proprietors typically fall under the “single account” ownership category, while bank accounts for LLCs and other incorporated businesses fall under the “corporation, partnership or unincorporated association account” ownership category.
For sole proprietors, business and personal assets may be considered together for FDIC insurance coverage if the accounts all have a single owner. If you have a personal and business checking account at the same bank, the deposits for those accounts are added together and insured for up to $250,000.
Even if a sole proprietor opens an account in their business's name, they'll still have only up to $250,000 of FDIC insurance coverage for all of their accounts at that institution. That’s because there is no legal separation between the individual and the business with a sole proprietorship.
Limited liability corporations, on the other hand, are considered legally separate from the owner. So even bank accounts for single-member LLCs will fall under the “corporation, partnership or unincorporated association account” ownership category, and those assets are covered separately from any personal bank accounts at the same financial institution.
But if your company has multiple business accounts in the same ownership category at a single bank — a business checking and savings account, as well as a business CD, all owned by an LLC, for example — the deposits for those accounts are added together and insured for up to $250,000.
You can use the FDIC’s insurance estimator to gauge your coverage across business and personal accounts.
American Express® Business Checking Member FDIC |  Bluevine Business Checking Deposits are FDIC Insured |  Grasshopper Business Checking Account Member FDIC |
|---|---|---|
NerdWallet rating 5.0 /5 | NerdWallet rating 4.7 /5 | NerdWallet rating 4.5 /5 |
Monthly fee $0 | Monthly fee $0 | Monthly fee $0 |
APY 1.30% With $0 min. balance for APY | APY 1.50% With $0 min. balance for APY | APY 1.80% With $25,000 min. balance for APY |
Bonus $0 Requirements to qualify | Bonus $300 Requirements to qualify | Bonus N/A |
Learn More at American Express National Bank, Member FDIC | Learn More at Bluevine, Deposits are FDIC Insured | Learn More at Grasshopper Bank, Member FDIC |
How to insure excess business deposits
Between payroll and general operating expenses, businesses can quickly max out their FDIC coverage at a single institution, leaving the rest of their assets unprotected if the bank fails. But there are ways to extend your FDIC insurance coverage well beyond the $250,000 limit.
Use multiple business banks
Sole proprietors can benefit from keeping their business and personal accounts at separate banks. And larger businesses can use separate accounts, at separate banks, for payroll, operating funds and emergency savings.
The benefits of using multiple small-business banks are two-fold. First, more of your assets are covered under FDIC insurance limits. And second, should one of your banks fail, you still have access to funds held at other banks while you wait for the FDIC to pay out your insurance.
Opt for an Insured Cash Sweep account
Insured Cash Sweep accounts let you deal with one primary bank account while magic happens behind the scenes. These accounts move your funds across a network of FDIC-insured banks — with no more than $250,000 deposited at any one institution.
This process can unlock millions of dollars in FDIC coverage. For example, Live Oak Bank Business Savings accounts can be FDIC insured for up to $10 million and Bluevine Business Checking is FDIC insured up to $3 million via Insured Cash Sweep.
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