Last updated: March 13, 2023 @ 3:38pm PT

Originally published: March 11, 2023 @ 1:00pm PT

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This is an outdated FAQ snapshot, please see https://pilot.com/blog/svb-faq for the latest

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⚠️ FDIC announcement on March 12: “Depositors will have access to all of their money starting Monday, March 13.”

https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm

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We’re keeping the rest of the FAQ below/we’ll continue to keep this up-to-date if folks encounter any issues this week.

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What this is and who this is for

This is a compilation of the most frequent questions we’re receiving from our customers and community.

This document is for tech startup founders trying to figure out what the recent failure of SVB means for you, whether or not you banked at SVB. 

This document is not a primer on the situation/an analysis of “how we got here” or macro trends—it’s exclusively focused on actionable advice for startup founders.

Who we are: we’re the founders of Pilot, the largest accounting provider for startups in the US, and we’re three-time startup founders. We’re not bank liquidity experts. This isn’t legal, tax, finance, or investment advice. This is our best take at a very volatile situation, but we can’t guarantee it’s free from error.

If you have questions, suggestions, or feedback about anything in this doc, please email us at founders@pilot.com.

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What you should do right now

• If you banked at SVB and haven’t already opened an account at another institution, do so now. The other most popular institutions in our customer base are: Mercury, Brex Cash, Chase, and Bank of America.
• If you’re a tech startup founder, Pilot runs a Slack group called “Founders Helping Founders.” We’ll be available over the weekend and during the week to field questions about this stuff. If you’re interested in joining, apply here.

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You didn’t bank with SVB. What should you do?

Read our general advice on startup treasury management, which is: avoid having more than the FDIC limit in deposit accounts at any bank, and invest the excess in short-term Treasury bills or a Treasury money market fund (not to be confused with a money market deposit account, which is a kind of bank deposit account like a checking account). See more details here.

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You banked with SVB

What’s happening to my outstanding wires?

Per an email from the new SVB CEO on 3/13 @ 3pm PT:

“All wire payments entered on March 9 or 10 that have not already processed have since been cancelled. If you wish to consummate those transactions, you need to reinitiate them.”

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What about international wires?

Per an email from the new SVB CEO on 3/13 @ 3pm PT:

“We are conducting business as usual within the US and expect to resume cross-border transactions in the coming days.”

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What about my cash sweep account?

You can withdraw all your funds from SVB, including the funds in the cash sweep account, by just initiating a wire in the amount of the total balance.

Our old answer is here for historical context:

So, here’s the good thing about the cash sweep account: the assets held in the cash sweep account aren’t bank deposits or on SVB’s balance sheet—they’re held by a third-party custodian. So our understanding is you should be able to recover 100% of the funds there, regardless of what happens to the uninsured deposits at SVB.

The bad news is: as of this writing, we don’t know how to access those funds or when it will be possible to do so. We’ll have to see whether it’s possible to withdraw them on Monday, or whether there will be further delays or a more complicated process.

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How do I access my funds <$250k?

You can access these funds now.

Our old answer is here for historical context:

You should be able to access them on Monday morning, per the FDIC site. (For the insured amounts, bank operations should essentially resume as normal on Monday.)

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How do I access my funds >$250k?

You can just withdraw the funds from your account.

Our old answer is here for historical context:

The FDIC’s site says “The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.”

Beyond that, a clear process hasn’t been announced by the FDIC about what uninsured depositors should do. We imagine it largely depends on what ends up happening with SVB (whether another bank acquires it or not.)

Regardless, we think it can’t hurt to file a claim on the FDIC website if you had amounts >$250k in your deposit accounts. Instructions below.

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Which of my SVB accounts are FDIC-insured?

This is a little confusing. Your Checking Account and a savings account named something like Startup MMA are both deposit accounts at SVB. The account named “Startup MMA” or similar is a money market deposit account—it’s a deposit account held at SVB.

The FDIC insures up to $250k in these accounts (in total, not per account), and now that the FDIC has taken over SVB, you should be able to access up to $250k from these accounts on Monday morning, with no additional work needed on your part.

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How do I file a claim with the FDIC?

You no longer need to file a claim—your full balance is available at SVB today.

Our old answer is here for historical context:

Go to the FDIC claims form portal and complete the steps listed there. We’ve taken screenshots of the full process here.

After you’ve filed the claim, make an appointment with the claims agent. (This is easy to miss.)

We can’t know for sure that the SVB claims process will be the same as prior processes, but the way they have worked in the past is that there is no priority assigned to submitting a claim form earlier than others (it’s not a FIFO process). The FDIC will announce a period in which claims can be submitted and then will wait until the period closes before doing final adjudications.

There’s no harm in submitting something now. You may not have all of the information needed until the initial advance dividends are paid.

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Should I call the FDIC’s toll-free number from the press release?

No. Everyone we’ve talked to was either sent to voicemail, or put on hold for a long time only to then be directed to the claims form on the website.

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How much of my uninsured funds will I be able to get back? When?

Your full balance is available at SVB today.

Our old answer is here for historical context:

No one knows.

There are lots of rumors, and those rumors range from “The FDIC has sold 50% of SVB’s assets and so folks will get about half of their remaining >$250k balances back in a few days and some more later, but potentially on the timescale of months” to “Someone is going to come in and make depositors 100% whole.”

We’ll probably know more on Monday, and we’ll keep this doc updated.

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Other FAQs

Where else should I consider opening an account?

The other most popular institutions in our customer base are: Mercury, Brex Cash, Chase, and Bank of America. See our general advice on this here.

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I moved my money out of SVB earlier this week. Do I need to do anything else?

Yes, you’re going to want to update anyone who ACHes money from or to this account, so that they instead pull from (or send to) your new bank account.

The easiest way to do this is to look in QuickBooks/your accounting software to see who has deposited money into/withdrawn money from your SVB account in the past 90 days, and get in touch with them with your updated ACH info.

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I have an acute cashflow issue (e.g. I can’t make payroll on Monday). What do I do?

Get in touch with your investors to see if they can make you a temporary loan.

When getting in touch with them, describe the situation as explicitly as possible. For example, if you have $750k in an SVB cash sweep account (which you know you’re going to get 100% of eventually), say that explicitly. See the example note below.

We’ve also heard about emergency bridge loans being made available from Capchase and Brex, but haven’t gone through the process directly ourselves. Ramp has also detailed how they can help, on the linked-to page.

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What should I tell my investors?

If you need capital to make your next payroll run or to otherwise fulfill a required near-term obligation, get in touch with your investors immediately. Here’s a sample note you can use—obviously, tailor it to accurately describe your situation.

We did all of our banking at SVB.

[$xyz] of our funds were held in SVB in deposit accounts, and we’ll be able to access $250k of that on Monday.

[$abc] were held in a cash sweep Treasury account, which means the funds are safe and we will get 100% of them back, but no one knows exactly when that will happen.

We have a new bank account at [bank name]. We need funds in that bank account on Monday to make payroll this week. Even taking into account the $250k at SVB that we can access on Monday, we’ll still be short [$xxx].

We’re investigating all options and are keeping a close eye on guidance from the FDIC, but we need your help. If you have the ability to wire us [$xxx], we can wire it back as soon as we have access to more of our funds, which should hopefully be soon.

Please give me a call at xxx-xxx-xxxx if you can help here.

If you don’t need the capital to make your next payroll run, it’s less pressing that you update your investors, though it’s still polite. When you do so,be explicit in detailing where all of your funds are stored, as in the sample above.

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I’m worried about managing cashflow if I can’t access my funds for a few months. What do I do?

The best thing to do right now is probably to just take a deep breath and see what we learn on Monday, because there’s a huge difference between “I can only access the first $250k and there’s no timeline for the rest” and “There’s a more explicit plan about what % I will be able to recover.”

Having said that, if you know you have a large discretionary cash outflow early next week (like, you’re about to make a big, optional purchase), yes, we’d recommend you hit pause there to see how the situation unfolds.

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What should I tell my team?

This is an important time to be explicit and transparent. Your team is a bunch of smart, talented people who are also adults. (If that’s not the case, you have bigger problems.) They also read the news, and are very reasonably going to have questions about this. Being coy or evasive isn’t going to achieve anything other than causing them not to trust you.

Regardless of whether or not you were affected by SVB, I’d recommend a short, clear, concise note detailing whether you were or weren’t affected.

If you were affected, be clear about how affected you were: does this risk impacting your upcoming payroll run? If so, what are you doing to mitigate risk there? (This could simply be “We’re getting in touch with our investors and are investigating loan options.”)

End the note making clear that the situation is very dynamic and we all expect to learn more early next week, and that you’ll share updates as you have them.

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Should I transfer funds to my personal accounts?

At this point it doesn’t seem advisable to move funds from SVB to a personal account. The insured amount is already insured (you’re good there), and we’ll have to await the resolution on the uninsured funds.

You should instead open another account somewhere, so you have it ready.

In general, there are legal and tax reasons (which we can't advise you on) not to move company money into a personal account.

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Are there other good resources covering this?

Goodwin Procter’s FAQ page

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Questions we’ve quickly answered

• Why do Brex and Mercury say I’m insured to $1M when for SVB it’s only $250k?
  Mercury and Brex aren’t banks, they’re fintech companies. Under the hood, they sweep your deposit into accounts at multiple different banks, each of which gets its own FDIC insurance up to $250k. Brex post here. Mercury post here.
  
  
• What happens to SVB Private Bank/mortgages there?
  You still have to pay your mortgage :)
  
  
• Should I be worried about other banks failing?
  Based on history, challenging market conditions for one bank can mean challenging conditions for other banks (which is evident from how bank stocks have been trading recently on public markets and is supported by recent comments from the U.S. Treasury Secretary about tracking “a few banks” “very carefully”)
  
  
• What about SVB multi-currency accounts held in Europe by Standard Chartered Bank?
  This link from Goodwin Procter might be helpful
  
  
• Because funds are frozen with SVB, I can’t make payroll. Can I fund payroll from my personal account?
  If you’re going to go down this path, the best way to do this would be to open a new bank account at a new institution, and have you loan the company money by sending a wire/etc into that bank account, and then running payroll out of that bank account. Document the loan in some way (ideally talk to your corporate lawyer on this one.)

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Other questions?

Keep questions coming via email to founders@pilot.com. If you have great answers to any of these, please ping us and we’ll do our best to incorporate them. (We’re periodically updating this page with our in-progress open questions.)

• What happens with my debt line/credit line/letter of credit at SVB?

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Notes

This is a living document and is being updated as we learn more. Please email founders@pilot.com with updates, suggestions, or questions that aren’t covered here.

We’re three-time startup founders and startup finance enthusiasts—but we’re not lawyers, financial advisors, CPAs, or tax preparers. This is not legal advice, financial advice, or tax advice and isn’t meant as a substitute for consulting your own qualified advisors. This document is being built over time, so it’s not comprehensive and may not be up-to-date on all topics. This document is provided as-is.

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