Concerned about the Banking Crisis?

By Glenn Burrell, vCFO/ Business Advisor Specialist

As if rising interest rates and inflation are not enough, we are now being confronted with a banking crisis. 

If you are like most of us, recent events at Silicon Valley Bank (SVB) and Signature Bank are cause for concern and we should all be paying attention.  It has been a long time since we have had an old-fashioned bank run. Things are different now, and today is not 2008. It is easier today to move your money around with a simple push of a button. 

But what should you do?  Following are tips to help you through these challenging times:

•       Most importantly, don’t panic. Unless you had deposits at SVB you should not be at risk. Even if you owned an SVB deposit account your account is protected by the FDIC who is committed to protecting depositors by removing the normal $250,000 limit on deposits.
•       If you have funds in excess of $250,000 at one bank you may want to consider spreading the money around to other banks. In doing so each individual bank account will be afforded FDIC protection.  
•       If you have funds in excess of $250,000 at one bank talk to your bank about what sweep options they have.  In a sweep transaction funds in excess of a pre-set amount are moved at the end of the day, or when the pre-set maximum is triggered, to another account or investment at the bank.  Your bank should be able to provide you with a range of choices. They should also be able to provide fees associated with set up and transfer, if any. In addition, there are independent firms that can manage your cash exposure across multiple banks. If you choose to outsource this to an independent firm make sure to do your due diligence on the provider and understand what the fee structure is before engaging.      
•       Take the time to document all of your deposit account credentials and store them in a secure location, preferably offline. You do not want to move money via a website that may not be operational.  
•       Check with your payroll provider for information they are posting on any exposure they may have to the troubled banks. So far, major payroll providers like ADP, Paychex, Gusto, and others have posted as having no exposure to SVB or Signature. You should find that your payroll processing platform is in tune with concerned customers.      

The good news is that all eyes of the federal government and the banking community are watching.  As comforting as that may be, and as a small business owner you know where the buck stops. Be concerned, don’t panic, do your research and take a measured approach to protecting you and your assets.