Are business accounts FDIC insured?
Learn how FDIC coverage works and how to help protect your hard-earned funds. Presented by Chase for Business.
- Deposits in most business accounts at a Federal Deposit Insurance Corporation (FDIC)-insured bank are protected up to $250,000 per depositor, per insured bank, for each account ownership category. This coverage is automatic for deposit accounts at FDIC-insured banks.
- The coverage limit applies to the total of all deposits held by the business entity (e.g., corporation or LLC) at that single bank, regardless of the number of accounts.
- FDIC coverage does not include non-deposit investment products like stocks and bonds.
Every deposit you make tells a story — of late nights, big ideas and bold moves that have helped your business grow. FDIC insurance is a government guarantee that can help your business’s story continue in the event that your bank fails. It’s the quiet force behind your FDIC-insured business account that gives you the confidence to plan for what’s next.
This guide is designed for small business owners who are looking to understand the importance of FDIC insurance for business accounts. In it, we’ll break down the strategies to keep your funds safe, and how FDIC coverage increases your protection.
What is FDIC insurance and why does it matter for your business?
Federal Deposit Insurance Corporation (FDIC) insurance is coverage backed by the U.S. government that is automatically applied to eligible deposit accounts opened at an FDIC-insured bank. For businesses, it guarantees that all deposits held under a single business entity are combined, such as a corporation or LLC, and insured up to a $250,000 limit at any one bank.
FDIC insurance coverage for business accounts provides a safety net for your operating cash. It means that your funds are protected, up to the insurance amount, by the credit of the United States government, not just the stability of the individual bank. This protection is crucial for maintaining cash flow, managing risk and securing your company’s financial future.
Business accounts eligible for FDIC insurance
When you’re deciding which types of business bank accounts to open, it’s important to consider whether the account is eligible for FDIC insurance. This covers all types of deposit accounts held at an FDIC-insured institution, including those owned by businesses. Business accounts that are available for coverage include:
- Business checking account
- Business savings account
- Business money market account
- Business certificate of deposit (CD)
- Other official items issued by a bank
- Cashier's check
- Money order
- Negotiable order of withdrawal account
FDIC insurance limits for business accounts
The standard maximum deposit insurance amount is $250,000 per depositor, per FDIC-insured bank, for each ownership category. This means that all the deposits owned by a corporation, partnership or unincorporated association at the same bank are added together and insured up to this limit.
For example, if a business has a checking account with $175,000 and a CD with $125,000 at the same bank, only $250,000 of that money will be insured. This means there is the potential for a $50,000 loss if the bank fails. To keep those funds covered, the business must transfer $50,000 to another FDIC-insured bank.
Business account types and programs NOT eligible for FDIC insurance
There are limitations to what products fall under FDIC. Among the things the FDIC does not cover are:
- Investments in stocks
- Bonds
- Mutual funds
- Cryptocurrency assets
- Life insurance products
- Treasury bills, bonds or notes
While the FDIC does not cover these products, it’s typical for many brokerage and investment accounts to be insured by the Securities Investor Protection Corporation (SIPC)Opens overlay for protection against a firm’s failure, which is a different type of coverage than bank deposit insurance.
How to check FDIC insurance status for your business
Since FDIC coverage is applied per ownership category rather than per individual account, it’s important to check your bank’s status and understand your legal structure.
Here are the steps you can take to check your bank’s insurance status and manage your funds safely:
- Look for the official FDIC sign: Legally, the “Member FDIC” logo must be on the bank’s website and app and posted at the branch.
- Use the FDIC’s BankFind toolOpens overlay : You can search for a bank by its name, website or location.
- Contact the FDIC: Submit a request using the FDIC Information and Support CenterOpens overlay or speak with a representative directly at 1-877-275-3342.
- Check your coverage: Use the FDIC’s Electronic Deposit Insurance Estimator for calculating your specific coverage and identifying any potential gaps.
- Understand your coverage limits: The standard limit is $250,000 per depositor, per insured bank, for each account ownership category. The business structure you choose also influences how this coverage works.
- For sole proprietorships: Your accounts fall under the “Single Account” ownership category, so your personal accounts and business accounts are combined and insured up to the limit at the same bank.
- For legally separate entities: Since a corporation or LLC’s funds are separate from owners’ personal accounts, only their business accounts at the same bank are combined to be insured up to the limit.
Alternative ways to insure your business bank account
Once you’ve confirmed that your bank falls under the FDIC’s coverage, there are other important steps you can take to mitigate risk –– especially if your business keeps a large balance above the covered $250,000.
Allocate balances across multiple institutions
Spreading funds across multiple FDIC-insured banks means the coverage limit applies to accounts within each bank individually.
Use a Deposit Network Service
Insured Cash Sweep and the Certificate of Deposit Account Registry Service are Deposit Network Services available that automatically distribute your large deposits among a network of partner banks, ensuring no single account exceeds the $250,000 limit.
Work with established banks
While FDIC is a good safeguard, it’s also a smart idea to further minimize risk by choosing a bank with a solid track record of financial stability and a high capital-to-asset ratio.
Diversify by ownership category
If you have multiple accounts at the same bank, you can maximize your FDIC coverage by using different ownership categories, as long as each category serves a legitimate business purpose and meets FDIC requirements. This strategy can effectively double your coverage if your business operates under a separate legal entity (LLC or corporation), since these funds are insured separately from owners’ personal accounts.
Manage liquidity and invest cash
If your funds exceed the $250,000 limit and aren’t needed to fund immediate operations, you may consider short-term investments in U.S. Treasury Bills or Treasury Money Market Funds. These aren’t FDIC insured but do offer a level of government protection, which can make them a safe place to hold large amounts of cash with low credit risk and accessible funds.
FAQs on FDIC insurance
Still have questions about FDIC coverage for your business accounts? Read on for answers.
How much are business accounts FDIC insured?
Business accounts are insured up to $250,000 per depositor, per bank, for each ownership category.
What happens to my business accounts if my bank fails?
In the event that your bank fails and it’s FDIC-insured, the FDIC typically transfers business accounts to another insured bank in the amount equal to their balance at the failed bank with minimal disruption, or issues a check to each depositor for the insured balance of their account.
If I have business and personal accounts at a bank, are they both FDIC insured?
Yes — but whether they are insured separately or together depends on your business’s legal structure. If you operate under a separate legal entity such as an LLC or a corporation, your business and personal accounts are each insured separately up to the limit. If your business is a sole proprietorship, it falls under the “Single Account” ownership, and your personal and business account funds are combined and insured together up to $250,000.
Does FDIC insurance cover multiple business accounts at one bank?
Yes. FDIC insurance covers all eligible business accounts at one bank by combining the funds across all your accounts per ownership category to be insured up to the $250,000 maximum.
