If your bank fails tomorrow, the FDIC pays you back up to $250,000. That is the short answer. The longer answer matters because the limit depends on how your business is structured, whether you bank with a chartered bank or a fintech platform, and what "per depositor, per insured bank, per ownership category" actually means for an LLC versus a sole proprietor.

Small-business owners most often ask how the $250,000 limit applies, what pass-through coverage means at a fintech, when sweep networks make sense, and what the FDIC does not cover.

What Does FDIC Insurance Mean for a Business Account?

The Federal Deposit Insurance Corporation is a U.S. government agency that insures deposits at member banks. If an FDIC-insured bank fails, the agency reimburses depositors up to the coverage limit. FDIC insurance covers up to $250,000 per depositor, per insured bank, per ownership category.

That phrase has three moving parts:

• Per depositor means each legal owner of the funds. An LLC is one depositor. You, personally, are a different depositor.
• Per insured bank means the limit resets at each separate FDIC-member bank. Two accounts at the same bank do not get two limits. Two accounts at two different banks do.
• Per ownership category means the FDIC groups accounts by how they are owned: single, joint, business (corporation, partnership, or unincorporated association), revocable trust, and a few others. Each category gets its own limit.

A practical example: your S-corp holds $200,000 in checking at Bank A. You personally hold $150,000 in savings at the same Bank A. Both are fully insured. The S-corp is in the business ownership category; you are in the single ownership category. They do not share a limit.

FDIC insurance applies to business checking, business savings, money market deposit accounts, and certificates of deposit at FDIC member banks. It does not apply to investment products sold by the bank, cryptocurrency, or losses caused by fraud or unauthorized transactions. Those have separate protections.

How Does FDIC Coverage Apply by Business Structure?

This is where small-business owners get tripped up. The same $250,000 limit applies very differently depending on your entity.

Sole proprietors and DBAs

A sole proprietorship is not a separate legal entity. The IRS and the FDIC treat the business as you. A sole proprietor's business and personal single-ownership accounts at the same bank share one combined $250,000 FDIC limit.

If you have $180,000 in your personal savings and $150,000 in your sole-prop checking at the same bank, only $250,000 of the combined $330,000 is insured. The remaining $80,000 is uninsured by the FDIC and would become a receivership claim if that bank failed.

Multiple DBAs do not help. If you run "Jane Doe Photography" and "Jane Doe Consulting" as two DBAs of the same sole proprietorship, both accounts roll up under your single ownership category. You get one $250,000 limit, not two.

LLCs, corporations, and partnerships

An LLC or corporation is insured separately from the owner's personal accounts at the same bank because it is a distinct legal entity, giving the business its own $250,000 limit. Partnerships work the same way.

So if you convert from a sole prop to a single-member LLC, the legal status of the business changes and the FDIC category changes with it. The LLC now sits in the business ownership category with its own $250,000 limit, separate from any personal accounts you hold at the same bank.

One caveat for single-member LLCs: the FDIC looks at whether the entity is engaged in an "independent activity." A shell LLC with no real operations may be treated as the owner's funds for insurance purposes. If your LLC files its own tax return or is taxed as a corporation, it is more likely to meet the FDIC's separate-entity requirements. If it is a disregarded entity with no business activity, confirm the treatment with your bank.

Multiple business entities

Two separate corporations get two separate $250,000 limits at the same bank, provided each is genuinely operating as its own entity. The same logic applies to an LLC and a corporation owned by the same person.

Are Fintech Business Accounts FDIC Insured?

Many fintech platforms are not banks themselves; they offer business banking solutions in partnership with FDIC-insured banks that hold customer deposits. The fintech handles the app, the card, the integrations, and the support. The partner bank holds the money.

This is where pass-through insurance comes in. Fintech customer deposits receive FDIC coverage on a pass-through basis when the partner bank fails and the platform's recordkeeping requirements are met. In plain English: if the partner bank fails, the FDIC looks through the fintech's omnibus account and treats each end customer as an individual insured depositor up to $250,000.

Two conditions have to be met for pass-through to work:

1. The records must clearly identify each end customer and their balance. This is the fintech's job.
2. The account must be properly titled at the bank in a way that signals it holds funds for the benefit of others.

Pass-through FDIC insurance is triggered by the failure of the partner bank, not the fintech platform. If the fintech fails or its records are incomplete, access to funds and insurance resolution can be delayed or disputed. The FDIC has explicitly warned about this risk after several non-bank platform failures in recent years.

How to verify your fintech is actually FDIC-protected

Three steps:

1. Read the deposit account agreement. It should name the partner bank.
2. Look that bank up in the FDIC's BankFind directory at fdic.gov to confirm active insured status.
3. Ask the provider which ownership category your account falls under. The answer should be specific, not "yes, you're insured."

If a provider cannot name the partner bank or dodges the ownership category question, treat that as a red flag.

How Can a Business Get More Than $250,000 of FDIC Coverage?

Most small businesses keep operating balances well under $250,000 and never need to think past the basic limit. But if you hold larger reserves, payroll cash for a bigger team, or a tax set-aside that crosses the line, you have two ways to extend coverage.

Option 1: Open accounts at separate insured banks

The simplest method. Two business accounts at two different FDIC-member banks gives you $500,000 in coverage. Three banks, $750,000. The banks have to be separately chartered, not just separate branches of the same bank. JPMorgan Chase branches in New York and California are the same bank for FDIC purposes.

Tradeoffs: more login credentials, more statements, more reconciliation work, and more effort moving funds when bills come due.

Option 2: Sweep networks

A sweep network is a service that automatically distributes your deposit across a roster of partner banks, each holding a slice under $250,000, so the full balance stays insured. Sweep networks extend FDIC coverage past $250,000 by distributing deposits across multiple FDIC-member banks, but they spread funds across partner banks the customer did not pick, often pay a lower blended rate than a direct deposit account, and add reconciliation work because more banks appear on statements.

Three tradeoffs worth naming:

• Partner-bank opacity. Your money sits at banks chosen by the network, not by you. The list changes. You may not recognize the names.
• Rate dilution. Sweep programs usually pay a blended rate across partner banks, often lower than what a direct deposit account at a single bank would pay.
• Reconciliation friction. Statements may show multiple partner banks. For bookkeeping and audits, that means more lines to explain.

If you choose a sweep program, the provider should publish the full list of partner banks. Read it. Check whether any partner bank already holds funds for your business directly, because deposits at the same bank do not double up.

What Is the Difference Between FDIC and SIPC for a Business?

These get confused constantly. They protect different things at different kinds of institutions.

| Protection | What it covers | Limit | Where it applies | |---|---|---|---| | FDIC | Bank deposits: checking, savings, money market deposit accounts, CDs | $250,000 per depositor, per bank, per ownership category | FDIC-member banks | | SIPC | Brokerage assets if the broker fails: stocks, bonds, mutual funds, cash held at the broker | $500,000 total, including a $250,000 cash sublimit | SIPC-member broker-dealers |

FDIC insurance does not cover fraud, unauthorized transactions, investment products, or cryptocurrency. SIPC protects brokerage investment accounts up to $500,000, including a $250,000 cash sublimit, if the brokerage fails; SIPC does not cover market losses.

A few clarifications small-business owners ask about:

• A money market deposit account at a bank is FDIC insured. A money market mutual fund held at a broker is SIPC protected against broker failure, but not against the fund losing value.
• Stocks and bonds held in a business brokerage account are SIPC protected against the broker's failure. They are not protected against the market dropping.
• Cryptocurrency held through any platform is covered by neither FDIC nor SIPC, regardless of marketing language to the contrary.

What Does FDIC Insurance Not Cover?

A short list, because confusion here costs real money:

• Fraud and unauthorized transactions. For consumer accounts these fall under Regulation E; for business accounts they fall under the bank's commercial deposit agreement. Novo business accounts are not consumer accounts under Reg E. The FDIC does not reimburse you because a vendor was paid twice or a payroll file was intercepted.
• Investment products. Stocks, bonds, mutual funds, and annuities are not FDIC insured even when sold by an FDIC-member bank.
• Cryptocurrency. Bitcoin, stablecoins, and tokens held through any platform are not FDIC insured. Stablecoin reserves held at banks may be insured to the issuer, not to the token holder.
• Operational losses. Chargebacks, vendor disputes, bad checks from customers, and business losses are commercial issues, not deposit insurance events.
• Safe deposit box contents. Not deposits. Not insured.

What Happens If Your Bank Fails?

Bank failures are uncommon but they do happen. When they do, the process is faster than most business owners expect.

The FDIC typically makes insured deposits available within a few business days of a bank failure, often by the next business day. The agency uses one of two methods:

1. Acquiring-bank transfer. Another FDIC-member bank takes over the failed bank's accounts. Your account number, balance, and direct deposits usually move with you. You may get new cards and login credentials within a week or two.
2. Direct payment. If no acquirer is available, the FDIC sends each insured depositor a check or wire for their insured balance.

What helps:

• Keep your formation documents handy. An LLC operating agreement, EIN letter, or corporate filing speeds the FDIC's verification of your ownership category.
• Know your balance and account titling. Discrepancies between the fintech's records and the partner bank's records can slow pass-through claims.
• Expect delays for excess funds. If any single ownership category at the failed bank held more than $250,000, the excess becomes a claim against the receivership. You may recover some of it as the FDIC sells off the failed bank's assets, but there is no guarantee of full repayment and the timeline can stretch into years.

How Does Novo FDIC Insurance Work?

Novo Platform Inc. ("Novo") is a fintech, not a bank. Banking services are provided by Middlesex Federal Savings, F.A., Member FDIC. Novo is a fintech platform, not a bank, and Novo customer deposits are held at an FDIC-insured partner bank with up to $250,000 of pass-through FDIC coverage per business depositor. Novo charges $0 monthly fees and [$0 for incoming wires](/business-payments/wires), and Novo does not accept cash deposits.

A few specifics that matter for FDIC planning:

• Each business depositor on Novo is insured up to $250,000 through the FDIC on a pass-through basis at the partner bank. Novo's partner bank is Middlesex Federal Savings, F.A., Member FDIC. You can verify its status in the FDIC BankFind directory at fdic.gov.
• Novo charges $0 monthly fees and $0 for incoming wires, so those specific account costs do not reduce your operating balance.
• Stripe and Shopify payouts can land directly in the Novo deposit account held at Middlesex Federal Savings, F.A., Member FDIC, with no intermediate non-bank holding account.
• Tradeoff: Novo does not accept cash deposits. If your business takes in physical cash, you will need a separate plan for that, either a secondary account at a branch-based bank or a cash-handling service that deposits on your behalf.

For many small businesses with working capital under $250,000, one FDIC-insured deposit account may provide enough deposit insurance coverage for informational planning purposes. If your balances regularly exceed that limit, common options to consider include layering in a second insured account at a different bank, using a sweep program with the tradeoffs noted above, or moving the excess into invested treasury instruments with their own risk profile. This is general information, not financial advice; consult your own financial, legal, or tax advisors before making a decision.

Frequently Asked Questions

Does my business checking get the same FDIC protection as my personal account?

Yes, with one structural difference. Both are protected up to $250,000 per depositor, per insured bank. If your business is an LLC or corporation, the business gets its own $250,000 limit separate from your personal accounts at the same bank. If you operate as a sole proprietor, business and personal single-ownership accounts at the same bank share one combined $250,000 limit.

Does an LLC get its own $250,000 limit separate from the owner?

Yes. An LLC is a distinct legal entity, so its deposits sit in the business ownership category with their own $250,000 limit at each FDIC-insured bank. The owner's personal accounts at the same bank fall under the single ownership category and have a separate $250,000 limit.

Are fintech business accounts FDIC insured?

Fintech platforms are not banks, but they partner with FDIC-insured banks that hold the deposits. The end customer gets FDIC coverage on a pass-through basis up to $250,000 if the partner bank fails and the platform's recordkeeping requirements are met. Pass-through insurance does not protect against the fintech itself failing, so the platform's operational and financial health is a separate consideration.

If my bank fails, when do I get my business deposits back?

The FDIC typically makes insured deposits available within a few business days of a bank failure, often by the next business day. The agency either moves the accounts to an acquiring bank or sends a direct payment to depositors. Amounts above the $250,000 limit in a single ownership category become a claim against the receivership.

What's the difference between FDIC and SIPC for a business?

FDIC insures bank deposits, like business checking, savings, money market deposit accounts, and CDs, up to $250,000 per depositor, per bank, per ownership category. SIPC protects brokerage accounts up to $500,000, including a $250,000 cash sublimit, if the broker-dealer fails. SIPC does not cover market losses. Cryptocurrency is covered by neither.

Can I get more than $250,000 of FDIC coverage for one business?

Yes, two main ways. Open accounts at separately chartered FDIC-member banks to multiply the limit, or use a sweep network that distributes the deposit across multiple partner banks. The first gives you control and direct rates but adds operational work. The second is automatic but spreads your funds across banks you did not pick and usually pays a blended rate.

Disclosures

Novo Platform Inc. ("Novo") is a fintech, not a bank. Banking services provided by Middlesex Federal Savings, F.A., Member FDIC. Eligibility subject to final Novo determination.

Deposits are insured for up to $250,000 through our partner bank, Middlesex Federal Savings, Member FDIC.

Novo Platform Inc. ("Novo") strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.