What's the best bank for startups?

A framework founders can use to identify the best banking partner.
Justin Wolz
Head of Marketing
September 13, 2023
read time
1 minute
Reviewed by
July 15, 2024

Being a startup founder is a perpetual juggling act. You always have something to manage, an investor or lender to pitch, a fire to put out, and hundreds of other competing priorities. 

Your choice of bank may not top your list of priorities, but as your company grows, you will quickly learn why this is one of the most consequential decisions you will make as a founder. 

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Reason #1: The Scaling Dilemma

Venture-backed startup founders and small business owners have no shortage of basic bank accounts to choose from. Legacy financial institutions like Chase or Bank of America and new business banking fintechs both offer the basics — money storage, wire transfers, lines of credit, savings accounts, and money market funds to earn on interest rates.

It’s enough that you can focus on higher-priority items like finding your first customers and building products. However, once you make it past product-market fit, your initial choice of banking partner will start bubbling to the surface.

Scaling introduces complexities that can seep into even the most seemingly uncomplicated operations. Here are three reasons why that basic business checking account will begin to miss the mark as you grow.

Controlling your costs

Handling expense approvals over Slack or email can help an early-stage startup stay nimble, but tracking your costs will become increasingly difficult as your employee counts grow. To avoid any account balance surprises, responsibly managing your funding will eventually mean setting up multi-level approvals and streamlining your payment data reconciliation as your company scales. Growing companies that fail to scale their finance stack lose a staggering 20% to 30% in revenue each year as a result.

Reimbursing your employees

A lean team can get by managing this process through spreadsheets or casual mailbox requests. As your team grows, this ad-hoc system can become a behemoth of confusion, misplaced receipts, lost invoices, and unhappy employees waiting for their cash back.

Switching to an integrated solution that allows employees to upload receipts, file reimbursement claims, and trigger streamlined approvals from finance can transform an arduous manual process into one that’s seamless, transparent, and efficient.

This is one of the major perks of having your business banking integrated with expense management.

Paying your vendors

In the early days, making a few payments via ACH, wire transfer, or checks may be feasible. However, as your business scales and you engage with more vendors, service providers, and freelancers —each with its own billing cycles, payment terms, and preferred payment methods—the process quickly becomes convoluted.

This is where your basic banking options, whether from traditional banks or newer fintechs, might not offer you the support and advanced payable capabilities you need. Such a scenario can lead to delayed payments, a lack of intuitive visibility into your cash flows, and seemingly uncontrollable monetary workflows.

"Now, you might wonder, "Why fret over the functionality of a bank account when there's a SaaS solution for everything?" or "Isn’t it just a means to earn APY on my cash deposits?”

Clinging to this mindset invites a silent enemy into your organization —technical debt— reinforcing an expensive, siloed approach to finance that will rear its head further down the road when tech startups begin to scale.

SaaS startup Superfiliate is disrupting affiliate marketing in e-commerce. Discover why their co-founder transitioned from Silicon Valley Bank (SVB) to Rho.

Reason #2: The Silent Enemy, Technical Debt

When you expect less from your banking platform, you naturally lean on other point solutions to get specific jobs done.

As a result, your software costs and transaction fees can rise quickly. For example, standalone AP automation, expense tracking, and cash management tools can be expensive and come with hidden integration costs with accounting software or bookkeeping platforms like QuickBooks.

Managing multiple financial platforms can also place a strenuous burden on your already time-strapped team. A disjointed finance stack increases the risk of errors and makes knowing how your business operates difficult.

On average, businesses lose 120 working days yearly to administrative tasks, underlining the cost of managing finances and treasury operations across disconnected platforms.

In short, your choice of startup business banking partner could generate substantial costs that further hurt you as you lean on expensive solutions to fill gaps.

Reason #3: New Entrants, Same Old Customer Support

Emerging online banking platforms backed by venture capital may present a shiny alternative, glossy mobile apps, and futuristic promises to have you believe they offer a panacea for the limitations of traditional banks.

Regrettably, beneath the appealing exterior and ambitious pricing, these new players often struggle to deliver on the much-needed service levels and functionality, with hidden service fees cropping up unexpectedly.

A persistent stumbling block among these modern providers is unresponsive customer support, a problem you wouldn't tolerate from your personal bank.

Consider a situation where you lose your debit card or credit card and require an immediate response; slow response times from your personal bank would be unacceptable, and it should be no different when it comes to your business bank.

A trove of customer reviews voice grievances about slower response times, sub-par communication, and the tendency towards a reactive rather than proactive problem-resolution approach.

You're in trouble if you have to tag the company's founder on social media just to get a response. That's a sign of a customer support system failing to meet expectations. This issue can unexpectedly veer startups off their growth path, leading to a diversion of focus and missed opportunities.

Rethinking the Business Bank Account

A basic business bank account helps early-stage startup entrepreneurs get started. However, as your business grows, your startup bank account, far from being a mere storehouse for your funds, should visibly support your financial operations seamlessly.

Much like carefully assessing covenants in a venture debt or business loan agreement, it's crucial to consider the functionality you'll need from your banking partner. Missteps in either can restrict your company's agility and long-term prospects.

Visit G2 to learn how Rho’s fee-free business banking and finance platform, business credit cards, and more compare with different startup solutions, including:

  • Legacy financial institutions: Chase Bank (Chase Business Complete Banking), US Bank, Wells Fargo,
  • Newer financial technology companies: Mercury, Ramp, Brex, BlueVine, Novo

Interested in opening a Rho account to run your business finances?

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FAQs About Rho

What is Rho?

Rho is the all-in-one financial platform organizations can bank on. With corporate cards, expense management, bill pay automation, banking, and treasury in one integrated platform, Rho equips lean finance teams and leaders with the technology they need to drive greater efficiency and control over how money moves in and out of their organizations.

Behind the platform is an expert support team ready to help businesses safely collaborate on finances for greater speed, savings, and control.

What is the Rho mobile app?

The Rho mobile app helps businesses manage their finances from anywhere, including mobile banking, expense management, and more. With the Rho Mobile app, you can process expenses and reimbursements, check your daily balances, and more, all on the go.

What do I need to set up a business checking account with Rho?

Rho is open to businesses (including LLCs) that are based in the US. Terms & conditions apply.

To open a business checking account with Rho, we require general business information and key documents, including:

  • Articles of Incorporation
  • Company bylaws
  • EIN letter
  • Beneficial owner information
  • Additional supporting documents where applicable

Does Rho have any minimum balance requirements?

No, we do not have minimum opening deposit requirements. Rho is open to qualifying businesses in the US. Terms and conditions apply.

Can I manage multiple business entities in Rho?

Yes. Rho is built to scale with you and all of your different business banking needs. With a single login you can add, manage, and toggle between multiple entities.

For example, if you’re an accountant for multiple organizations, an investor with multiple portfolio companies, or have multiple business locations, you can manage them all with Rho and save precious time and money.

Can I send physical checks with Rho?

Absolutely—you can send money by check to any individual or business. Simply select your payee, transfer account, date, and frequency (if you’d like to make it a recurring check), assign a budget, and attach an invoice and memo if desired.

Rho will then generate a physical check made out to the specified payee and send it by mail to their address. Easy!

You can also easily deposit checks via photo check deposit by capturing an image of both the front and back of the check and uploading it to the Rho application.

Once captured, Rho validates the check and transfers the money into the specified account. Typically, funds are available within 10 business days after the check is uploaded.

Note: Rho does not offer cash deposits; businesses may only deposit cash through linked accounts.

Does Rho charge fees for sending ACH or Wire payments?

No. Rho does not charge fees for ACH, domestic wires, or international SWIFT wires. However, international wires can be subject to additional fees set by the recipient, correspondent, or intermediary banks in addition to the SWIFT network.

Rho does charge a low fee of 1% for FX transfers. You can read more about our pricing here.

Does Rho have any physical locations?

No. Rho is a fully digital finance platform and does not support cash deposits or ATM withdrawals. You can deposit checks by remote deposit capture digitally. All Rho customers are assigned a dedicated Rho Specialist for hands-on human support.

Does Rho support ATM withdrawals or charge ATM fees?

No, Rho cards cannot be used to withdraw cash in person from a bank ATM. Cash advances or cash transfers are not supported on Rho corporate cards.

Does Rho charge overdraft fees?

No, we do not charge overdraft fees, monthly maintenance fees, monthly service fees, or payment processing fees. You can learn more about our pricing here.

Are Rho corporate cards Visa or Mastercard?

Rho Cards and card payments are provided by Mastercard. For more information about Mastercard payment solutions and merchant services, visit their website.

Learn how to use Rho Cards to improve your bottom line when paying for goods and services like Amazon Web Services cloud computing charges, digital ads, and more.

Does Rho offer partner rewards?

Yes! We have partnership rewards we have with providers like Stripe, Salesforce, Carta and more on our Partner Rewards page.

Can I link Rho to PayPal?

Yes. Learn more in our help section.

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Rho is a fintech company, not a bank. Checking and card services provided by Webster Bank, N.A., member FDIC; savings account services provided by American Deposit Management, LLC and its partner banks.