On Friday, March 10th, 2023, Silicon Valley Bank was closed by regulators and put into receivership. This is the largest bank failure since Washington Mutual in 2008. On Sunday, March 12th, a second institution – Signature Bank – was also shut down. Many business owners are now concerned about their bank and the financial system overall.

Our advice at this point is simple:

1. Don’t panic: SVB and Signature Bank had uniquely risky loan and deposit portfolios because of concentration with startup companies and cryptocurrency. Additionally, multiple regulatory actions have been taken to reduce the risk to other banks.
2. Two banks are better than one: If you have business accounts at a second bank, there’s no harm in moving some cash there to temporarily diversify and maximize your FDIC coverage. If you don’t have a second banking relationship, this is a good opportunity to set one up.
3. Assess your exposure to startup companies: If your customers or vendors are startups, many of them banked with SVB. You should expect payment disruptions and may need to update information for electronic payments.
4. Don’t fall for payment scams: Criminals will try to take advantage of this event. We expect to see fake emails from “vendors” with “new” account information, emails or texts that impersonate your executives and tell your payables staff to make “emergency” payments to new vendors. Tell your staff to be on alert and always get a second confirmation before changing payment information.

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