Consider yourself lucky if your small business worked with Silicon Valley Bank
If your business banked with Silicon Valley Bank then count yourself as very, very lucky.
Yes, your bank failed to protect your money. Its managers made unwise investment decisions, it was poorly supervised and poorly regulated. But you still got your money back.
True, there were some scary moments. Customers had their accounts frozen. Merchants at Etsy and Shopify were caught short. Others had their payroll checks stopped. It was almost a catastrophe. Almost.
But then the federal government stepped in and “in an effort to shore up confidence in the banking system”, the treasury department, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) announced that all – all! – of the bank’s customers would have their money protected and accessible.
“Small businesses across the country that had deposit accounts at these banks can breathe easier knowing they’ll be able to pay their workers and pay their bills,” Joe Biden said in a statement shortly after the collapse. “And their hardworking employees can breathe easier as well.”
Phew! Small business customers at Silicon Valley Bank dodged a bullet there. And lucky for them too that THEIR bad decisions didn’t compound the bad decisions made by the bank’s management.
Yes, that’s right. THEIR bad decisions. Putting all your eggs in one basket is never a good idea – that’s why there is a cliche about it. Every client I know is familiar with the $250,000 FDIC insurance coverage that protects their cash at a financial institution. And, while most small businesses have balances less than that amount in their accounts, a large number of my clients and companies hold funds in excess of this insurance limit at their respective banks. It’s estimated that 90% of Silicon Valley Bank’s
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