Fintech Startup Brex Ends Small Business Cash Management: What’s Next for Account Holders?

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Brex, a popular business management spend startup, has announced that it will be shifting away from the small business market – the primary segment that Brex began serving. The typically Brex-backed small business owner is now considered “more qualified” for his Brex Cash alternative banking option and will lose access to his account by August 15, 2022.

Unfortunately, this is not an isolated incident in the small business world. The small business community is already facing significant rate increases. In addition to inflation and fluctuating supply issues, small business owners have enough cash to balance without losing confidence in their cash management solution.

So what does this shift in strategy mean for Brex users and merchant banking as a whole? We discuss what you need to know about the Brex Cash shutdown and how Nav can help you find the best cash management solutions for your business going forward.

What is Brex?

Brex was founded in 2017 as a fintech providing corporate card options for small businesses and startups in the United States. Over time, Brex has grown with the goal of serving the small business community with a robust financial operating system. Part of this model included Brex Cash, a cash flow management tool.

The Brex Cash management tool has enabled small businesses to control their cash more effectively. While Brex Cash functioned similarly to a traditional business bank account (users could send and receive payments via ACH, deposit checks, and manage spending between different users), it was not a bank account.

Why is Brex terminating my account?

Over the past five years, Brex’s business model has shifted away from serving the traditional small business owner towards larger scale operations.

Earlier this year Brex announced new partnerships which would initiate its expansion into new software tools supporting tech startups and large enterprises. Soon after, it became clear that Brex could not meet the needs of both customers and decided to stop serving small businesses.

Brex narrowed its definition of entrepreneurs from small businesses and startups to only companies that had some sort of “professional funding” — in other words, venture capital, angel investors, or accelerator funding.

Brex accounts will remain active until August 15, 2022. After that, Brex Cash customers will no longer be able to use their account or transact with their Brex card. Brex encourages current customers to connect another bank account or alternative platform to transfer any account balance before the August 15 deadline.

Can I still use my Brex card?

Brex Cash users can still use their Brex corporate credit card until the August 15, 2022 deadline.

Luckily, there are plenty of credit card options that offer similar perks like 0% APR and cashback rewards.

Brex Cash Account Alternatives

The cash management tool Brex, although not a traditional bank account, worked very similarly. Account holders had a routing number, the ability to make deposits and send payments (ACH, transfers, checks).

Similar features (and more) are available through a small business checking account. It can help you increase your chances of securing financing, boost your legitimacy with lenders, streamline your cash management, and organize your finances for tax season.

Nav has compiled account details from top business verification partners so you can find the right solutions for your business needs. Visit Nav’s Business Audit Marketplace to see your best options in one place.

Do I need a business bank account?

While some small business owners have chosen to manage their personal and business finances in one place, there are several advantages to separating them.

  • You will develop your ability to accept different types of payments. Bank accounts can make it easier to accept mobile payments like Cash App and Square. It also makes it easier to accept payments for invoices, services, and physical products.
  • It significantly minimizes personal liability. As a sole proprietor, you would put your personal finances at risk in the event of debt or legal action.
  • You’ll make it easier for yourself at tax time. A business account makes it easy to track business income and expenses or track deductions while keeping your personal expenses separate.
  • It’s easier to apply for funding. A separate business bank account can make you more attractive to potential lenders. Upon request, you can quickly share your financial statements and tax returns.

How to Choose the Right Business Bank Account

Several factors go into your choice of business bank account: the type of small business you have, your financial needs to support that business, your annual income, whether you need other people on the account, etc

Some small business owners choose to open a business account where they have their personal bank account. While this may work for some, the convenience of an existing partnership may not be the best fit for your needs.

At a minimum, the bank you choose should be a member of the FDIC or NCUA to ensure the safety of your money. From there, you’ll want to view the details of the accounts available to you. Are there any fees? If yes how much? Is there a minimum balance? Is there a physical location or is it online only? Do they have an app to let you manage your funds on the go?

Creating a business account can seem like a daunting task, but Nav has the resources to help you make the best decision for your business. Compare the best business checking accounts now.

Best Business Bank Accounts for Entrepreneurs

Not all small business bank accounts are created equal. When selecting the right business bank account, consider your day-to-day needs and the type of account features that would best meet those needs. Consider things like affordability, benefits over things you already spend, required balances, and whether it’s realistic for your cash flow, etc.

Compare the details of these trusted business bank accounts:

What do I need to open a business bank account

The documents required to open a business bank account vary depending on the bank and your banking needs. Generally, you will need to prepare the following documents for your application:

  • Business details such as your name or DBA, business address, EIN and other contact information.
  • Personal information such as your social security number, driver’s license and additional identification.
  • Business formation documents if you are running a partnership, corporation, or LLC.

How do small businesses get financing for their business?

Opening a business bank account has several benefits, and access to finance is one of them. A business bank account helps a potential lender get a clear picture of your business finances and determine the type of financing you qualify for. Without a business bank account, you might struggle to establish business credit.

Get expert advice on your next business bank account

Nav supports businesses of all sizes and has the corresponding business bank accounts. Whether you’re looking to improve your cash flow tracking or want to protect yourself from possible future liabilities, a business bank account may be right for you – and better yet, Nav can help you find it.

In addition to small business loans and small business credit cards, Nav has a portfolio of business bank account partners available to support the success of entrepreneurs like you. Compare your options now on our business verification marketplace.

This article was originally written on June 20, 2022.

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