Top Silicon Valley Bank Alternatives & Competitors

The recent news about the potential second-largest bank failure in history has caused significant ripple effects throughout the digital ecosystem, with the full impact yet to be determined.

As a result, many tech-forward businesses that relied on Silicon Valley Bank (SVB) for accessible banking solutions are now left in a lurch. However, there are several excellent alternatives available, many of which I have personally used and would like to recommend to you in this article.

If you’re in a hurry and need a quick solution, I highly recommend Mercury Bank. It is my top pick due to its impressive array of features, support, and ease of use, which have only improved over the years. The bank offers up to ten accounts that you can set up instantly under each main entity, giving you greater control and flexibility.

Additionally, it provides access to similar startup networks as SVB and even easier-to-use convenience features, such as company cards and customized limits.

Mecury Bank

Here are some of the features I appreciate about Mercury Bank and trust you will too:

• FDIC-insured up to $1 million.
• A quick and easy 100% online account vetting and opening process, typically active within five to seven business days from application.
• Zero Maintenance fees.
• Easy initiation of ACH transfers (typically 24-hour transfers), and very easy to move money in general.
• Simple app-based paper check deposit process.
• Generally low to no wire fees for most transactions.
• A super-easy-to-use, fully featured (non-glitchy) mobile app.
• Dozens of debit cards can be issued instantly for personal or team use.
• Excellent user and permission controls, ranging from account access for bookkeepers to specific card spending limits.
• Mercury Capital offers a wide variety of funding options (similar to Pipe, PayPal Working Capital, VC debt, equity raises, etc.).
• An easy-to-search transaction history.
• Built-in invoicing features.
• Plenty of perks and software + platform discounts for customers.
• Multi-factor security measures.

Despite its many advantages, there are a few drawbacks to Mercury Bank, such as limited in-app high-interest savings options. However, they do offer better rates for large depositors, and their default savings account is still better than the paltry $0.001% interest rate offered by most corporate banks. It’s also worth noting that Mercury Bank isn’t technically a standalone bank but is backed by Evolve Bank & Trust. This arrangement has some benefits, such as risk mitigation.

Grasshopper Bank

Grasshopper Bank is an excellent choice for venture-backed companies and Small Business Administration (SBA) lending. It caters to VC and startups, providing some VC-specific solutions. What’s more, it also offers SMB services, making it a better option for diversification. Here are some of the features that make Grasshopper Bank a great choice:

• Partnership with RAMP for easy integration and approval
• Flexible funding solutions for every VC lifecycle
• Offers GP term loans
• Capital Call lines of credit
• Working Capital revolvers
• End of Life funding needs
• Dedicated relationship management is available
• Treasury management solutions
• Also, an SBA-preferred lender with dedicated team experience
• Offers 1.51% APY yields (no minimum balance)
• Innovative 1% cashback DEBIT cards
• Unlimited FREE ACH and incoming domestic wires
• No monthly fees, unlimited transactions
• Fairly quick and easy to start up and get approved
• Solid digital card controls (like Mercury in that regard)
• Grasshopper Bancorp is its bank, not just a digital brand of another bank.

However, Grasshopper Bank has some limitations, such as:

• Limited track record, a relatively new player (starting in 2019)
• Only FDIC insured up to $250,000, unlike Mercury up to $1,000,000
• Not a great solution for cash-heavy businesses

If you’re in a hurry and need a quick solution, I highly recommend Mercury Bank. It is my top pick due to its impressive array of features, support, and ease of use, which have only improved over the years. The bank offers up to ten accounts that you can set up instantly under each main entity, giving you greater control and flexibility.

Novo Bank

Novo Bank is an excellent choice for eCommerce SMBs. It offers no monthly fees and an industry-leading number of third-party integrations. Furthermore, it covers up to $20,000 in free Stripe fees (card processing), making it an ideal option for eCommerce and Software as a Service (SaaS) businesses. Here are some of the features that make Novo Bank a great choice:

• $20,000 in comped stripe card processing fees
• The highest number of third-party integrations for eCommerce sellers (including Stripe, Shopify, Wise, Square, Xero, and QuickBooks)
• Unlimited refunds on ATM fees nationwide (US)
• No monthly fees
• No fee ACH transfers
• Excellent built-in invoicing
• Send paper checks for free (from a digital app)
• Member discounts to popular services

Novo Bank’s drawbacks are as follows:

• No great high-interest yield products in-house
• Can’t send domestic or international wires (but does integrate with Wise for this purpose)
• No cash deposit solutions
• $27 fees for insufficient funds

Relay Financial

Relay Financial is an excellent choice for businesses that require the easiest banking setup. It has an excellent mobile app and can issue up to 50 employee debit cards (physical or virtual). Furthermore, it offers no account fees and no overdraft fees. Here are some of the features that make Relay Financial a great choice:

• No account fees
• No overdraft fees
• Excellent integrations via Plaid
• One of the most user-friendly banking apps tried
• Integrates easily with Quickbooks
• Can issue up to 50 virtual or physical debit cards with a few clicks
• Separate cash and keep things organized with up to 20 different checking accounts
• Excellent Gusto

Lili: Best for Service-Based Businesses & Consultancies

Lili is an innovative banking solution that offers cash-back debit cards with a wide array of preferred vendors, a 1.5% yield on any savings amount, tax optimization, and built-in accounting tools. What’s even better is that Lili has no account fees, no overdraft fees up to $200, and fee-free ATM usage at 38,000+ domestic US locations.

They also offer DEBIT cashback rewards at many third-party partners and have built-in invoicing software, a real-time write-off tracker, and automatic tax set-asides. Lili is a great option for service-based businesses and consultancies.

While Lili can take some time to get approved, their Lili Basic plan is free and comes with limited features. However, for access to all of their perks, there is a Lili Pro plan that charges a $9/month fee.

Lili Drawbacks:

While Lili is an excellent option for small business owners, there are a few drawbacks to consider.

• The approval process can take some time, and in some cases, the company has paused applications for periods in the past.
• Additionally, the Lili Pro plan charges a $9/month fee, which provides access to all of the benefits, but the free Lili Basic plan has limited features.

Axos Bank: Best for Brick and Mortar Small Businesses

Axos Bank is a great middle-of-the-road business banking solution that offers interest rate yields, ATM fee reimbursement, and SBA loan specialization. They offer free basic business banking with no minimums or maintenance fees or treasury management solutions. Additionally, they have easy CDs and Money Market add-ons to your business checking and offer a $200 welcome bonus.

Axos Bank also has a 1.01% APY on accounts with at least $5,000 (daily balance average) and unlimited domestic ATM fee reimbursement. This makes it a great option for hybrid online/offline businesses.

One downside to Axos Bank is that 1% still isn’t a great yield, but it’s better than most banks for basic business checking. Additionally, they’re not really geared toward the tech or Silicon Valley crowd and have some annoying volume-based transaction limits for no-fee accounts.

Axos Bank Drawbacks:

Although Axos Bank is a great option for hybrid online/offline businesses, there are still some drawbacks. While the interest rate yield is better than most other banks for basic business checking, it is still only 1%. Furthermore, it is not particularly geared toward the tech or Silicon Valley crowd, and some may find the volume-based transaction limits for no-fee accounts annoying.

Capital.xyz: Best High Yield SVB Alternative

Capital.xyz is a custom-built banking solution for tech startups and founders. They have easy-to-use banking tools and offer 4%+ interest rates on balances, making them a great high-yield SVB alternative.

Capital.xyz’s app is easy to use and has a “Raise” feature to automate fundraising, including SAFE templates with fiat or crypto support. They also have a best-in-class 4% APY yield and allow you to easily pause transactions across your accounts and cards with one button. Additionally, they use Blue Ridge Bank and do not claim any exposure to SVB.

One drawback to Capital.xyz is that they’re still relatively new to the market and feel like they’re in the startup phase. Additionally, they’re crypto-friendly, which could be a double-edged sword. Another potential issue is the possibility of history repeating itself.

If you’re in a hurry and need a quick solution, I highly recommend Mercury Bank. It is my top pick due to its impressive array of features, support, and ease of use, which have only improved over the years. The bank offers up to ten accounts that you can set up instantly under each main entity, giving you greater control and flexibility.

Capital.xyz Drawbacks:

While Capital.xyz is a fantastic option for tech startups and founders, there are still some drawbacks to consider. Firstly, the company is relatively new to the market and still feels like it is in the “startup” phase. Additionally, while the company is crypto-friendly, this could be a double-edged sword. Furthermore, while the interest rates are excellent, there is always the question of whether history will repeat itself.

Final thoughts on Silicon Valley Bank Alternatives

Finally, if things get tough out there, it may be worth considering opening accounts with some of the “big banks.” Even if you only maintain a small balance, being able to move money around the financial system quickly is just common sense.

The largest business banks by market cap include JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley, US Bank, Charles Schwab, PNC Financial, TD Bank, Truist Financial, Capital One, Bank of New York Mellon, State Street Bank, and HSBC.

There are a few other banks that are worth considering as alternatives to SVB, but they are currently wrapped up in contagion whispers.

1. Republic Bank: It is an excellent option that initially was the first choice for many startups in the Bay Area when the news started breaking. However, their stock has taken a beating due to guilt by association with SVB.
2. PacWest Bank: It is another regional option that is worth considering for Silicon Valley-based companies. Overall, there are some excellent options for companies that are looking for alternatives to SVB. However, it is essential to weigh the pros and cons carefully before making a decision.