Are Business Accounts FDIC Insured?

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.

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.

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:

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.

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.

» MORE: Best business bank accounts for LLCs

You can use the FDIC’s insurance estimator to gauge your coverage across business and personal accounts.

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.

» MORE: Spooked by bank failures? Minimize the impact to your business