Our Take
The bottom line:
Arc delivers high-yield, online financial products for fast-growing startups, but other small businesses will likely be better served elsewhere.
Pros & Cons
Pros
- No fees for Operating and Reserve accounts.
- High-yield options for cash reserves.
- Dedicated on-call customer support.
- Access to up to $5 million in FDIC insurance for Treasury accounts.
Cons
- No mobile app.
- Operating accounts do not earn interest.
- No checks, cash deposits.
Full Review
Arc isn’t your typical business bank account, and it isn’t for every small business. The fintech’s business accounts and financing options are designed for startups — specifically, rapid-growth software startups.
On the business banking side, Arc’s business cash management account offers a three-in-one solution, combining business checking, savings and investment accounts under one platform.
Arc Operating accounts: These are built for day-to-day banking needs. Operating accounts have no monthly fee or minimum balance requirements and offer free domestic wires (incoming and outgoing). You can schedule recurring vendor payments, issue virtual debit cards for employees with spending controls and limits, grant read-only access to your accountant and automatically sync your Operating account with QuickBooks.
Arc Reserve accounts: These provide a high-yield business savings option with a 4.00% APY and no minimum balance required to earn interest. The account has no monthly service fee and offers free ACH transfers and domestic wire transfers.
Note: While you can withdraw cash from Operating and Reserve accounts using your Arc debit card, you cannot deposit cash. Arc also does not offer or issue physical checks.
Arc Treasury accounts: These offer a potentially even higher-yield option for startups with large cash reserves. You can choose from three types of investments: insured deposit programs, money market funds or U.S. Treasury bills.
Insured deposit programs earn 2.00% to 3.00% APY and are eligible for up to $5 million in Federal Deposit Insurance Corp. coverage through partner banks via Insured Cash Sweep. Money market funds earn a higher APY (roughly 5.30% APY as of this writing) and are covered by Securities Investor Protection Corporation insurance for up to $500,000.
Arc Treasury funds can also be invested in one, three and six-month Treasury bills, which are backed by the U.S. government. These have a higher yield — currently 5.40% to 5.51% — but money held in Treasury bills is not instantly accessible.
Unlike Operating and Reserve accounts, Treasury accounts have a monthly management fee that is equal to a percentage of the total cash held in your account. Advisory fees for standard Treasury accounts depend on your total Arc deposits and range from 0.24% to 0.60%, including third-party fees. Arc also has a Platinum Treasury account, which does not charge an advisory fee but has third-party fees equal to 0.05% of the total cash in the account.
It’s important to note that Arc isn’t a bank, it’s a financial technology company. Arc partners with Stripe Payments Company to provide account services for operating and reserve accounts. Funds are held with Evolve Bank and Trust, an FDIC-insured financial institution.
Arc’s treasury accounts are managed by Atomic Invest LLC, an SEC-registered agent, and Treasury funds are provided by Pershing Advisor Solutions LLC, a brokerage that acts as a custodian and clearing firm for the investment account.
Arc business loans
Arc also offers startup business loans via venture debt and revenue financing with flexible terms and funding decisions within 48 hours. If approved, funds are available the same day if deposited into your Arc account.
Arc Cash Management is best for:
- Software startups that have large cash reserves and want an all-in-one financial product.
- Small-business owners that need a high-yield savings or treasury account.
- Founders that want access to venture funding.
- Businesses that frequently send or receive domestic wire transfers.
Arc Cash Management at a glance
Operating | Reserve | Treasury (standard) | |
|---|---|---|---|
Monthly fee: | $0. | $0. | Arc advisory fee: Starting at 0.19% of balance. Third party fees: 0.05% of balance. |
Minimum opening deposit: | $0. | $0. | $0. |
APY: | N/A. | 4.00%. | Up to 5.26%. |
Transactions: | Unlimited. | Unlimited. | Varies by investment type. |
Bonus: | None. | None. | None. |
How to open an Arc business account
You can open an Arc Cash Management account via the platform’s website. It typically takes 10 minutes to apply for an Arc account and up to three business days to receive a decision on your application. Only senior executives or board members can apply on behalf of the company.
What you need to open an account
- Personal information: First and last name, date of birth, Social Security number or ITIN, birth country and city, and home address.
- Business details: Legal business name and “doing business as” (if applicable), along with your company website, address, phone, business structure and EIN. You also need to provide the date the business was formed, your industry and the source of funds (revenue, savings, investments, etc).
The application also asks for details about your product. While Arc was built to service software startups, its cash management account is available to a wider variety of businesses.
Where Arc Cash Management stands out
No fees for Operating and Reserve accounts: Arc Cash Management offers the equivalent of a free business checking and savings account via its Operating and Reserve accounts. Account holders also have no transaction fees, no overdraft fees and no fees for domestic wire transfers.
High-yield options for cash reserves: Arc Reserve accounts rival the best business savings accounts, offering a 4.00% APY, with no monthly fee or minimum balance requirements. There’s also no top-end cap on your interest-eligible balance, though funds are only insured by the Federal Deposit Insurance Corp. up to the standard $250,000 per depositor, per institution.
Dedicated on-call customer support: Arc’s emphasis on customer support is a standout feature compared with other fintechs in the business banking space. Rather than rely heavily on email support (which they offer), Arc leans into live support with dedicated on-call relationship managers who are available even beyond Arc’s standard support hours of 9 a.m. to 7 p.m. ET.
Access to up to $5 million in FDIC insurance: Funds held in your Arc Treasury account are eligible for up to $5 million in FDIC insurance coverage. However, the additional FDIC coverage only applies to Treasury funds invested in Insured Deposit Programs, which earn 2.00%-3.00 % APY. Investments in money market funds and treasury bills, which earn between 5.30% and 5.51% APY, are covered by SIPC insurance and the U.S. government, respectively. Arc Operating and Reserve accounts carry the standard FDIC insurance coverage of $250,000 per depositor, per institution.
Where Arc Cash Management falls short
No mobile app: Despite being a financial technology company focused on tech startups, Arc does not currently have a mobile app. Accounts are still accessible via the bank’s mobile website, but that can be cumbersome if you need to move money or manage your accounts on the go. Mercury Business Account offers similar cash management services to Arc, including a Treasury account with lower fees, and has a top-rated mobile app.
Operating accounts do not earn interest: While Arc offers high-yield business accounts via its Reserve and Treasury accounts, funds in your Operating account do not earn any interest. Small-business owners who want to maximize the earning potential of their day-to-day business account can look to an option like Grasshopper Bank, which offers a free business checking account that earns up to 2.25% APY and offers 1% cash-back rewards on qualifying debit card purchases.
Startups can also take advantage of Grasshopper’s Accelerator Business Checking, which offers the same APY and cash-back benefits plus additional perks, like up to $125 million in FDIC insurance coverage via the Insured Cash Sweep network. Grasshopper also offers SBA and startup loans, as well as networking events for startup founders and “office hours” to workshop pitch decks and accelerator applications.
No checks, cash deposits: Arc isn’t a bank and therefore lacks some basic business banking functions, like the ability to write a check or deposit cash. These features aren’t deal breakers for many businesses (and even fewer startups), but if your business makes frequent cash deposits, you’ll need to look elsewhere. Relay Business Checking offers free, easy cash deposits via compatible AllPoint ATMs. Relay also has a free high-yield business savings account that earns between 1.00% and 3.00% APY, depending on your balance.
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