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While getting a business loan can mean receiving a sudden, large influx of cash, this money is not considered income, since you’ll be paying it back. As a result, you don’t need to pay income taxes on a business loan. In fact, borrowing money to back-up your business can actually lower your tax liability, since you can typically deduct the interest you pay as a business expense.

There are some exceptions to these rules, however, so read on to learn more about how financing can impact your taxes, along with other important things to keep in mind when filing your business tax return this year.

Do Business Loans Count as Income? The Short Answer

No, business loans do not usually count as income, since this is money that you will be paying back. So while getting a small business loan of, let’s say $100,000, puts money in your business bank account, you’ll be returning that money — along with interest — over time, so it’s not actually considered income.

Do Business Loans Count as Income? The Long Answer

In general, a business loan is not considered income. Unlike revenue generated from sales or services, a loan is a form of borrowed money that needs to be repaid. It provides your business with the needed capital to invest in operations, inventory, equipment, or other business needs. But it does not increase your company’s revenue or profit. In fact, a business loan is considered a liability on your business’s balance sheet.

Because a business loan is not an inflow of funds from regular business operations, it is not considered taxable income.

There is one notable exception, however. If you negotiate with a creditor or lender to reduce your debt, any amount of debt that is forgiven is considered income and you will owe taxes on the amount. So, even though you didn’t pay taxes on it when you received the funds, the act of forgiveness changes it from a loan to income.
Also keep in mind that alternative financing options, such as crowdfunding, grants, or equity investments, may not be considered loans and could have different tax implications. These sources of funding may have their own specific rules, so it’s important to understand how they may impact your business’s tax situation.

Recommended: Loan to Your Own LLC

How Small Business Loans Affect Taxes

While you don’t typically pay income tax on a loan, getting a small business loan can still have an impact on your taxes. Here’s how.

Interest Repayment

The way a small business loan works is that when you are paying it back, your loan payments are typically split between paying interest and paying down the loan principal.

The part of your payment that goes principal is not tax deductible. But the part you pay toward interest typically is tax deductible, which means it can reduce your taxable income and allow you to pay less in taxes than you otherwise would.

In order to take advantage of this tax deduction, however, you must have a true debtor-creditor relationship with the lenders (money you borrow from friends and family doesn’t count, even if you are paying them interest).
In addition, the money you borrowed must be used for assets and expenditures necessary to operate your business. If you spend the money in other ways or the loan proceeds are sitting in your business bank account, the interest will not be a deductible business expense.

Common Business Expenses You Can Write Off

In addition to interest on business loans, other expenses that are ordinary and necessary to keep your business running are also likely to be deductible. Here’s a look at some common small business write-offs you won’t want to miss.

•  Home office: If you are working from home in an area that’s only used for your business, you can usually deduct home-related expenses for that space — rent or mortgage payments, utilities, and more.

•  Commercial rent: If you rent office space, these money payments will most likely be deductible.
Utilities: Expenses like phone, electricity, and internet for your business typically qualify as business expenses.

•  Employee salaries: Whether you pay full-time, part-time, or contract help, employee salaries are generally deductible as a business expense.

•  Marketing: Money you invest in advertising, content marketing, and social media management is generally considered a deductible business expense.
Office supplies and equipment: This includes computers, printers, paper clips, paper, pens, and anything you need to conduct your business.

•  Professional dues: Membership fees or dues you pay to trade boards, business leagues, civic or public service organizations, bar associations, etc., can usually be written off as a business expense as long as the membership is required for (or helps you perform) your business duties.

•  Software: Your business can typically write off software programs you bought or subscribe to, such as Microsoft Office or Adobe Creative Suite.

•  Mileage: If your business involves traveling by car, you can likely write off some of those expenses, including mileage, tolls, and parking, though you’ll need to keep careful track during the year.

•  Entertaining clients: Taking a client out for a meal at a restaurant (that isn’t lavish) where work is discussed is 50% deductible in 2024.

The key to claiming business deductions is to keep detailed records of all your expenses, being careful to always separate business and personal expenses.

Recommended: When to Pay Business Taxes

Common Business Expenses You Can’t Write Off

There are certain business expenses that, while they may seem ordinary and necessary, are not deductible. Here are some to keep in mind when filing your business taxes.

•  Expensive gifts to clients: Gifts given to your clients or customers are only deductible up to $25 a person.

•  Entertaining clients: Taking clients out to the theater or for a day of golfing is not deductible.

•  Commuting expenses: Driving your personal car to and from work every day or taking public transportation is not deductible.

•  Contributions to political parties or candidates: You may feel strongly about and support a local political candidate. That person may plan to invest in your industry. Even so, contributions to that candidate’s campaign are not tax deductible business expenses.

•  Membership fees to social clubs: Even if the members may be clients or potential clients, membership fees to social or country clubs are not typically deductible.

Here’s a quick comparison of expenses that you can and can not write off.

Qualified Business Expenses	Unqualified Business Expenses
Dues to professional organizations	Dues to social clubs
Taking a client to a restaurant	Entertaining clients
Travel to client sites	Travel to and from your office
Client gifts that cost $25 or less	Client gifts over $25

Personal Tax Returns vs Business Tax Returns

If you started a business this year, you may wonder how filing your business taxes differs from filing your personal taxes. Here’s a look at how the two compare.

Similarities

If you operate your business as a sole proprietor, little will look different in how you file taxes. You’ll file your business income along with all your other income as personal income on IRS Form 1040.

The same goes for businesses with pass-through structures (meaning business income is passed-through to the owner), which include general partnerships, limited liability companies (LLCs), and S corporations.

The tax rate is also the same: For tax year 2024, it ranges from 10% to 37% percent. (You may also need to pay an additional 15.3% self-employment tax on income from your business.)

Your tax return may also be due at the same time. The tax-filing date for self-employed people, independent contractors, and gig workers is the same as it is for individuals – around April 15.

Recommended: What Happens If I Miss the Tax Filing Deadline?

Differences

When you own a business, there may be additional tax forms you need to fill out besides Form 1040. Which ones depend on how your business is structured. C corporation owners file Form 1120, while S corporation owners must submit Form 1120S. Partnerships file an informational return known as Form 1065.

If you have an LLC and want to be treated as a corporation or partnership for tax purposes, you will use Form 1120 or Form 1065 for your business taxes.

Depending on your business structure, tax rates for your business income may differ from personal income. If you have formally established a corporate entity, there is a flat federal tax rate of 21% on business income no matter how much your business earns.

Tax return due dates may also differ. If your business is structured as a corporation. partnership, or multi-member LLC, you’ll need to file around March 15 (unless the business operates on a fiscal year).

Also keep in mind that when you are operating a business, you will likely need to make estimated tax payments every quarter (on January 15, April 15, June 15, and September 15). Some businesses must also file monthly payroll taxes.

Here a snapshot of personal tax returns vs. business tax returns.

Similarities	Differences
Individuals, sole proprietorships, and pass-through businesses all file Form 1040 to report income.	Some business structures require other forms, such as Form 1120, Form 1120S, and Form 2065.
Sole proprietorships, partnerships, and other pass-through businesses pay the same tax rate on business income as personal income.	Businesses organized as corporations pay the corporate tax rate.
The tax-filing date for self-employed people is the same as it is for individuals – around April 15.	Partnerships (including multi-member LLCs) and S corps filing deadlines are typically March 15.

The Takeaway

Most business loans are not considered taxable income. However, when paying one off, you can likely deduct any interest you pay from your taxable income, thus lowering your overall tax liability.

There are always exceptions when it comes to taxes, so it can be a good idea to consult a tax professional if you’re unsure about whether any type of funding you’ve received could be counted as income and the validity of any business deduction.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

With one simple search, see if you qualify and explore quotes for your business.

FAQ

Is loan repayment considered a business expense?

Payments on the principle of a business loan are not considered a business expense and are, therefore, not tax deductible. However, the interest you pay on a business loan typically is considered a deductible business expense.

Can you deduct interest you paid on a business loan?

Yes, the interest you pay on a business loan is typically tax deductible.

Is an SBA loan considered income?

Just like the proceeds of any business loan, the money you receive through a Small Business Administration (SBA) loan is not viewed as taxable income, since you will be paying that money back. The interest you pay on an SBA loan (or any type of small business loan), however, can usually be deducted as a business expense.

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Photo credit: iStock/Drazen Zigic

SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOSB-Q224-1863084-V1

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Georgia has about 1.2 million small business owners statewide who can apply for small business grants. Submitting an application and competing for Georgia small business grants can help you grow your small or medium-sized enterprise in the Peach State.

Georgia’s economy has a gross domestic product of $661 billion as of 2023. That’s the ninth largest GDP in the United States out of the 50 states and the District of Columbia. Small businesses contribute to the nation’s economy.

If you’re a small business owner looking to fund or expand your enterprise, there are various sources of grants, which are funds that don’t need to be repaid, unlike loans. .Below, some of the top small business grants in Georgia that you can explore.

Grants for Small Businesses in Georgia

If you’re looking for small business grants in Georgia, here are some potential options to consider:

Go Global Georgia Grant Program

•  Program description: A Go Global Georgia grant from Georgia’s State Trade Expansion Program (STEP) can help you export your products and services from the Peach State to foreign markets.

•  Incentive: Get reimbursed up to 75% for eligible business expenses, including international marketing and trade show participation costs. (There’s a maximum award amount per company for each grant period.)

•  General requirements: Here are some of the general requirements for this grant:

◦  Be incorporated in the United States and operate in the state of Georgia

◦  Be a small business

◦  Be an active business in existence for at least 12 months

◦  Be in good standing with the federal government (have not been debarred)

◦  Be an export-ready Georgia company seeking to export goods or services of U.S. origin or that have at least 51% U.S. content

◦  Understand how exporting works and have sufficient resources to bear the costs associated with trade

•  How to apply: Applications for the Go Global Georgia export grant are available through the Georgia Department of Economic Development’s website. Applications must typically be received at least 30 business days prior to the requested export activity.

Atlanta’s Municipal Support for the Arts (MSA) Grant Program

•  Program description: The City of Atlanta offers grants to artists and arts organizations through its MSA program.

•  Incentive: Major arts organizations can receive up to $50,000 in matching grants supporting their community-based arts programs, and practicing artists can receive up to $4,000 supporting their work in the areas of dance, literary arts, media arts, visual arts, music, theater, or multidisciplinary genres.

•  General requirements: Here are some of the general requirements for this grant:

◦  Reside in the City of Atlanta or have Atlanta-based headquarters

◦  Operate as a 501(c)(3) nonprofit or independent artist

◦  Present an arts project within the City of Atlanta that’s open to the general public

◦  Nonprofit arts and community organizations must be incorporated in the state of Georgia and headquartered in Atlanta’s corporate city limits for three years prior to the application deadline

•  How to apply: You can apply for Atlanta MSA grants through the Mayor’s Office of Cultural Affairs website when the application period opens. Check to see the annual guidelines.

City of Clarkston Small Business Façade Matching Grant Program

•  Program description: Eligible commercial property owners in the City of Clarkston can receive partial reimbursement for enhancing the general aesthetics of a building exterior or façade.

•  Incentive: Receive up to $20K in reimbursements for making façade improvements to an eligible property in the City of Clarkston.

•  General requirements: Here are some of the general requirements for this grant:

◦  Own commercial property in one of the following City of Clarkston zoning districts:

◦  Clarkston Town Center (TC)

◦  Residential Commercial (RC)

◦  Neighborhood Commercial 1 (NC-1)

◦  Neighborhood Commercial 2 (NC-2)

◦  Propose a façade improvement project to your commercial property

◦  Adhere to all City of Clarkston/DeKalb County Fire Marshal codes and ordinances

•  How to apply: You can access the City of Clarkston small business façade grant application on the city’s website.

Perry Main Street BOOST Grant

•  Program description: BOOST is a small business grant program for eligible small business owners and entrepreneurs in the Downtown District of Perry, Georgia.

•  Incentive: Receive up to $1,000 per grant cycle that can help your small business grow.

•  General requirements: Here are some of the general requirements for this grant:

◦  Be a small business owner or entrepreneur within the Downtown District of Perry, Georgia

◦  Propose a small business project that seeks to use BOOST funds in one of the following eligible areas:

◦  Buying equipment, furniture, machinery, or fixtures for your business

◦  Making interior renovations

◦  Installing a security system

◦  Agree to place an “I’ve been BOOSTed” sign on your business for one month if awarded a grant

•  How to apply: You can access the BOOST Grant application on the City of Perry’s website.

Recommended: Hotel Loans Explained

City of Dallas Façade Grant Program

•  Program description: The City of Dallas Downtown Development Authority (DDDA) in the state of Georgia offers matching grants to eligible business owners who make façade improvements.

•  Incentive: Receive up to $5,000 in reimbursements for making façade improvements to an eligible property in the Central Business District of Dallas, Georgia.

•  General requirements: Here are some of the general requirements for this grant:

◦  Be a business or commercial property owner in the Central Business District of Dallas, Georgia

◦  Propose a façade improvement project to an eligible commercial or mixed-use property in the Central Business District

◦  Comply with all government rules, regulations, and laws, including local ordinances, building codes, and Historic Preservation Commission design guidelines if applicable

◦  Priority will be given to buildings that are historic, architecturally significant, visually prominent, or unsightly and in need of repair

•  How to apply: You can access the DDDA Façade Grant Program application on the city’s website.

Do You Have to Pay Back a Small Business Grant?

A small business grant typically comes with terms and conditions, and you may be responsible for paying back the grant if you violate those terms. In general, small and midsized business owners are not required to pay back an SMB grant absent any violations.

You typically have to sign a funding agreement to accept a small business grant. As mentioned above, the grant may come with certain conditions. Using the grant for an illegitimate purpose may violate the agreement and require business owners to pay back the grant.

Small business grants may require you to spend the money by a certain date. You may also have to provide proof of payment and a written statement detailing how you’ve spent the grant.

Recommended: Opening a Business Bank Account: How Business Bank Accounts Work

Who Is Eligible for Small Business Grants in Georgia?

Local business owners or operators of an enterprise with fewer than 500 employees may be eligible for small business grants in Georgia.

The U.S. Small Business Administration’s Office of Advocacy generally defines a small business as an independent business having fewer than 500 employees. Georgia, however, defines a small business as having 300 or fewer employees or less than $30 million in gross receipts per year. You can research which definition a particular grant uses. A small business, including individuals with freelancing business ideas, may be eligible for small business grants.

What Industries Does Georgia Support With Grants?

Georgia offers a variety of grants supporting the following industries:

•  Manufacturing

•  Performing arts

•  Retail trade (store and nonstore retailers)

Georgia Resources for SMB Owners Looking for Funding

Here are some resources for small and medium-sized businesses looking for funding in the Peach State:

University of Georgia Small Business Development Center (SBDC)

The University of Georgia’s SBDC is a statewide program that can provide Georgia’s small business owners with the following services:

•  Business training webinars and workshops

•  Commercialization assistance for small and mid-sized companies

•  Professional business consulting at no cost

SBA District Office in Georgia

The U.S. Small Business Administration (SBA) is a federal agency that provides resources and support to small business owners. The SBA District Office in Atlanta serves all 159 counties in Georgia.

Recommended: Small Business Grants in Pennsylvania

Alternative Funding Sources for Small Businesses in Georgia

Here are some alternative funding sources for small businesses in Georgia:

Georgia State Small Business Credit Initiative (SSBCI)

Georgia’s SSBCI is a federally funded program for small business owners in the Peach State. Federal law — the American Rescue Plan Act of 2021 — allocates nearly $200 million to Georgia’s State Small Business Credit Initiative program.

Here’s how Georgia plans to use the SSBCI funding:

•  Georgia Loan Participation Program — $70 million. This program uses SSBCI funds alongside private funds to support loans to small business borrowers.

•  Georgia CDFI Program — $60 million. Federally designated Community Development Financial Institutions (CDFIs) participating in the Georgia CDFI program can help minority-owned small businesses and other socially and economically disadvantaged communities in the Peach State access SSBCI funds.

•  Georgia Venture Capital Program — $30 million. This program will help eligible startups access venture capital.

•  Georgia Equity Direct Program — $20 million. This is another program that can help eligible Georgia startups access venture capital.

•  Georgia Small Business Credit Guaranty (SBCG) Program — $19.6 million. This program provides lenders with a 50% credit guaranty on eligible small business loans of up to $1 million.

Georgia Microloan Lenders

Community-based nonprofits may offer microloans of up to $50,000 to small business owners in Georgia, including microloans for women-owned small businesses. In general, microloans can range from $500 to $50K and may be available to startups.

Georgia SMB Loans from Private Lenders

Banks, credit unions, and private lenders may offer different types of small business loans to Georgia business owners.

Here are some of the funding products you may consider depending on your needs:

•  Commercial real estate loans

•  Equipment financing

•  Small business loans for startups

•  Working capital lines of credit

The Takeaway

There are many opportunities for small businesses in Georgia, whether it’s grants from state or local governments or grants from the private sector.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

Large or small, grow your business with financing that’s a fit for you. Search business financing quotes today.

FAQ

How do you get a small business grant in Georgia?

You can apply for Georgia small business grants, but there’s no guarantee you’ll get approved for one. You may have to submit a grant application as a qualified small business owner to be considered for a small business grant in Georgia.

How hard is it to get a business loan in Georgia?

You may have difficulty getting a small business loan in Georgia if you have bad credit or insufficient business experience. Unlike the case with grants, you generally have to pay back business loans with interest.

What is the easiest SBA loan to get approved for?

There’s no guarantee you’ll get approved for any SBA loan, but SBA microloans may be one of the easier ones to get if you’re a new business owner. Startups may be eligible for SBA microloans of up to $50K. If you’re looking for a streamlined application process, SBA Express working capital loans are an option you may consider.

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Photo credit: iStock/Boogich

SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOSB-Q224-1874330-V1

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For many people, owning a business is the American Dream. And for more and more entrepreneurs from underrepresented groups, setting up a business of their own has become a dream turned into reality. In growing numbers, underrepresented entrepreneurs are opening businesses across the country and helping to fuel the U.S. economy.

While small businesses in the U.S. are on the rise overall, exhibiting historic growth, minority-owned businesses in particular are experiencing a surge, according to data from the U.S. Census Bureau. Black business ownership is skyrocketing, with the share of Black households owning a business growing from 5% to 11% between 2019 and 2022 — the fastest pace in 30 years. And business ownership by Latinos increased from 7% to 10% between 2019 and 2022 — the fastest rate in a decade.

Businesses owned by members of underrepresented groups are opening all over the country. But which cities are the best places for entrepreneurs of color to own and run a business? In what areas are such businesses thriving?

To find out, SoFi looked at 50 major metro areas across the U.S. with populations of 1 million or less, and ranked them on eight different criteria, including diversity, inclusion, prosperity, and minority-owned business representation. (See below for the complete details about our methodology.)

What we discovered was that while businesses owned by underrepresented groups are in every region, certain areas of the country seem to be hotspots. Read on to learn about the 10 best metro areas for minority-owned businesses in the U.S.

Key Findings

•   Southern cities are seeing increasing numbers of businesses owned by underrepresented groups. For instance, Florida has two of the top five cities on our list, including the number-one city, Cape Coral. Charleston, SC ranks at number 6, and Fayetteville, AR is number 10.

•   Diverse populations are on the rise across Western states, fueling a boom in businesses owned by underrepresented groups in cities like Stockton, CA, Ogden, UT, and Colorado Springs, CO.

•   Palm Bay, FL was the only city in our top 10 to earn a perfect score of 5 in three of the key categories in our rankings: racial equity, inclusion, and revenue growth for minority business owners. And Palm Bay was the only city on the entire list of 50 to score a 5 in revenue growth for minority businesses.

Recommended: How to Start a Minority Woman Owned Business

The Top 10 Metros for Business Owners From Underrepresented Groups

The best metro areas for minority-owned businesses are located across the nation, as shown on the map below. These cities tend to offer a variety of programs and initiatives to encourage and assist underrepresented business owners.

1. Cape Coral, FL

This vibrant waterfront city in southwestern Florida tops our list as the best metro for minority business owners. The city’s population has grown steadily over the past few years and is becoming increasingly diverse as people flock to it for the weather, water access, and economic opportunities.

Of all the cities we analyzed, Cape Coral scores especially high for inclusion, racial equity, and business representation from underrepresented groups. The area has many resources and programs for aspiring minority business owners, including the Southwest Florida Hispanic Chamber of Commerce and Goodwill’s MicroEnterprise Program.

Cape Coral scoring:

Minority-owned business representation: 4

Business growth by minorities: 3

Immigrant share of population: 3

Revenue growth: 3

Racial equity: 4

Inclusion: 5

Prosperity: 3

Diversity: 3

Overall score: 24.30

Monica Spivey (right) of Tamu Cupcakery in Cape Coral, Florida.

Small Business Spotlight: Monica Spivey | Tamu Cupcakery

While the data show that Cape Coral is the best city for businesses owned by members of underrepresented groups, we wanted to go beyond the numbers and find out what it’s really like to run a business there. We spoke to Monica Spivey, the owner of Tamu Cupcakery, which specializes in creative gourmet cupcakes. Here’s what she told us about being a business owner in Cape Coral.

SoFi: How did you come up with your business idea?

Monica: After relocating to Florida from New York, I discovered my passion for baking. Experimenting with various cupcake flavors sparked the idea for Tamu Cupcakery. Encouraged by the enthusiastic feedback, I ventured into selling my creations at farmers markets. Subsequently, I joined the Goodwill MicroEnterprise program, propelling me into the realm of entrepreneurship as the proud owner of Tamu Cupcakery.

SoFi: How did you start the business?

Monica: Initially, Tamu Cupcakery debuted online before expanding to local farmers markets. Following this, I briefly showcased my desserts at the Franklin Shops in Fort Myers before finally establishing a physical storefront in 2021.

SoFi: Has the increased focus on racial inequality in the U.S. affected your business?

Monica: Being an African American female business owner has proven advantageous. Despite opening my storefront during the pandemic, sales have soared. There’s a specific demand for Black-owned businesses, and it’s been rumored that Tamu Cupcakery is the only Black-owned bakery in Cape Coral.

SoFi: What do you think could help more minorities become business owners?

Monica: Minorities embarking on entrepreneurship must conduct thorough research beforehand. Possessing discipline, focus, and strong money management skills are definite advantages in this pursuit.

SoFi: What minority-specific resources have you used to help your business?

Monica: I’ve utilized resources such as SCORE, SBA (Small Business Administration), Kiva,
and the Goodwill MicroEnterprise programs.

SoFi: How can people support your business?

Monica: You can visit us at 311 Del Prado Blvd S, shop online at www.tamucupcakery.com, leave positive Google reviews, engage with us on social media, and spread the word – we thrive on word-of-mouth recommendations.

SoFi: Are there any other minority businesses you’d recommend?

Monica: Absolutely. Please lend your support to my daughter’s clothing business, Spiff Made It, owned by Jade Spivey. Other outstanding minority-owned businesses include Jonesez BBQ, Flourish Hair Care by Monique, Sistah’s Indian Hair Closet by Shelonda, Something Blue TG by Teasha, Tobler Construction, Shop the Black Food Market by Keisha, and Mari G Solution by Marissa.

SoFi: How can we better support businesses owned by underrepresented groups?

Monica: To enhance support for minority businesses, consider spotlighting them, spreading the word through recommendations, making purchases, and offering valuable resources.

2. Boise City, ID

The capital city of Idaho, Boise is booming with new development and has recently seen an influx of residents. It was the fifth fastest-growing city in the U.S. in 2022 and 2023, and it’s projected to keep growing for the foreseeable future.

Boise has experienced an increase in racial diversity in the last decade as well, according to U.S. Census Bureau data. In our research, Boise scores high for racial equity and inclusion. To help the growth of businesses owned by underrepresented groups, the city has numerous resources for Hispanic, Native American, African-American, and Asian-American business owners.

Boise scoring:

Minority-owned business representation: 2

Business growth by minorities: 3

Immigrant share of population: 1

Revenue growth: 4

Racial equity: 5

Inclusion: 5

Prosperity: 4

Diversity: 2

Overall score: 24.10

Recommended: Guide to Grant Writing for Small Business

3. Colorado Springs, CO

Located at the foot of the Rocky Mountains, Colorado Springs is the second-biggest city in Colorado. This metro area is growing rapidly, and it’s on track to reach a population of 1 million by 2045, thanks in part to the economic opportunities available. Industries in Colorado Springs include aerospace, engineering, healthcare, IT, manufacturing, and insurance.

The city has become more diverse in recent years, and in our research it ranked highly in racial equity, inclusion, and prosperity. As a state, Colorado supports business owners from underrepresented groups: It has a Minority Business Office offering such resources as funding, grants, and networking.

Colorado Springs scoring:

Minority-owned business representation: 3

Business growth by minorities: 3

Immigrant share of population: 1

Revenue growth: 3

Racial equity: 5

Inclusion: 4

Prosperity: 4

Diversity: 3

Overall score: 23.51

4. Palm Bay, FL

Palm Bay, on the east coast of Florida, is a draw for its beaches, nature preserves, and outdoor recreation. The city’s population has increased by more than 15% since 2020 and has become increasingly racially diverse. Palm Bay’s Black and Hispanic residents now make up close to 40% of the city’s total population, and the city scores high for racial equity, revenue, and inclusion in our study. It’s business-friendly, too: Business owners from underrepresented groups can find a number of programs and services through the Florida State Minority Supplier Development Council.

Palm Bay scoring:

Minority-owned business representation: 3

Business growth by minorities: 0

Immigrant share of population: 2

Revenue growth: 5

Racial equity: 5

Inclusion: 5

Prosperity: 3

Diversity: 3

Overall score: 22.79

5. Stockton, CA

Located in the farmland of California’s Central Valley, Stockton is another growing metro area. Its central location and convenient highway access has made the city a home base for many businesses, including telecommunications and manufacturing firms, as well as the agricultural businesses the area is known for. More than 45% of Stockton’s population is Hispanic, 21% is Asian, and nearly 12% is Black. The city ranks high for minority-owned business representation, inclusion, and diversity.

Stockton scoring:

Minority-owned business representation: 4

Business growth by minorities: 1

Immigrant share of population: 4

Revenue growth: 2

Racial equity: 3

Inclusion: 5

Prosperity: 2

Diversity: 5

Overall score: 21.98

6. Charleston, SC

The biggest city in South Carolina, Charleston blends historic restoration with new development. Key industries in this Southern metro include aerospace, healthcare, automotive, defense, and technology. The city is considered pro-business, with a focus on economic development and growth. Charleston’s population has grown steadily in recent years, and it’s considered one of the fastest-growing cities in the U.S, with minorities making up about 24% of the population. The city offers programs to support minority-owned businesses, as does the state of South Carolina. In our rankings, Charleston earns high scores for business growth by underrepresented groups, racial equity, and inclusion.

Charleston scoring:

Minority-owned business representation: 2

Business growth by minorities: 4

Immigrant share of population: 1

Revenue growth: 1

Racial equity: 4

Inclusion: 4

Prosperity: 3

Diversity: 3

Overall score: 21.22

Recommended: A Survey of Unemployment by Cities

7. Omaha, NE

Located on the Missouri River near the Iowa border, Omaha is the biggest city in Nebraska. It has a vibrant economy and a low cost of living, with job opportunities in healthcare, manufacturing, financial services, and agribusiness, among others. The city’s population has grown and become more diverse in recent years, with people from underrepresented groups making up about 30% of the residents. Nebraska has resources to support minority-owned businesses, and Omaha earns high scores for racial equity, prosperity, and inclusion.

Omaha scoring:

Minority-owned business representation: 2

Business growth by minorities: 3

Immigrant share of population: 2

Revenue growth: 2

Racial equity: 4

Inclusion: 4

Prosperity: 4

Diversity: 3

Overall score: 21.08

8. Bridgeport, CT

Connecticut’s largest city is booming. Bridgeport, which is located on Long Island Sound, draws people with its bustling downtown, numerous parks, and a strong job market. The city is culturally and ethnically diverse, and it has a Small & Minority Business Enterprise to aid and provide resources for business owners from underrepresented groups, as well as programs and initiatives aimed at “creating a level playing field for minority businesses” from the Chamber of Commerce. In our study, Bridgeport got high marks for diversity, racial equity, inclusion, and immigrant share of the population.

Bridgeport scoring:

Minority-owned business representation: 3

Business growth by minorities: 2

Immigrant share of population: 4

Revenue growth: 0

Racial equity: 4

Inclusion: 4

Prosperity: 4

Diversity: 4

Overall score: 20.86

Recommended: Mompreneurs: Generational Wealth and Real-Time Struggles

9. Ogden, UT

Situated north of Salt Lake City at the foot of the Wasatch Mountains, Ogden boasts hundreds of locally owned and independent businesses. This active community attracts residents with its outdoor recreation; industries such as aerospace, life sciences, tech, and manufacturing; and a bustling arts and cultural scene. Ogden’s population is growing steadily, and it’s considered one of the more diverse cities in Utah, with a 30% Hispanic population. Ogden earns high scores for minority business representation and racial equality in our analysis.

Ogden scoring:

Minority-owned business representation: 4

Business growth by minorities: 3

Immigrant share of population: 1

Revenue growth: 0

Racial equity: 5

Inclusion: 4

Prosperity: 4

Diversity: 2

Overall score: 20.76

10. Fayetteville, AR

This city, nestled in the Ozark Mountains in the northwestern section of Arkansas, is one of the fastest-growing metro areas in the country. Top employers include companies like Walmart, Tyson Foods, and colleges like the University of Arkansas. Fayetteville is becoming increasingly diverse, and minorities account for about 24% of the population. Businesses owned by members of underrepresented groups are on the rise here, and the area has programs and nonprofits to help support them, including a free Business Accelerator program that provides business training and mentorship.

Fayetteville scoring:

Minority-owned business representation: 1

Business growth by minorities: 3

Immigrant share of population: 2

Revenue growth: 2

Racial equity: 4

Inclusion: 3

Prosperity: 4

Diversity: 3

Overall score: 20.71

Rankings By Cities We Looked At

Reviewing the full list of metro areas we studied can reveal some additional information about minority-owned businesses. For instance, Syracuse, NY and Provo, UT have some of the highest minority-owned business representation scores of the cities on our list. And New Haven, CT and Worcester, MA rank well for racial equity and inclusion.

Check out how other top metro areas are doing when it comes to minority-owned businesses.

Ranking	City	Minority-Owned Business Representation Score	Business Growth by Minorities Score	Immigrant Share of Population Score	Revenue Growth Score	Racial Equity Index Score	Inclusion Score	Prosperity Score	Diversity Index Score	Overall Score (Total possible is 40)
1	Cape Coral, FL	4	3	3	3	4	5	3	3	24.30
2	Boise City, ID	2	3	1	4	5	5	4	2	24.10
3	Colorado Springs, CO	3	3	1	3	5	4	4	3	23.51
4	Palm Bay, FL	3	0	2	5	5	5	3	3	22.79
5	Stockton, CA	4	1	4	2	3	5	2	5	21.98
6	Charleston, SC	2	4	1	1	4	4	3	3	21.22
7	Omaha, NE	2	3	2	2	4	4	4	3	21.08
8	Bridgeport, CT	3	2	4	0	4	4	4	4	20.86
9	Ogden, UT	4	3	1	0	5	4	4	2	20.76
10	Fayetteville, AR	1	3	2	2	4	3	4	3	20.71
11	Albuquerque, NM	3	1	2	2	4	5	3	4	20.32
12	Durham, NC	2	0	2	1	5	4	4	4	19.91
13	North Port, FL	4	2	2	1	4	4	3	3	19.91
14	Lakeland, FL	3	3	2	0	4	5	2	4	19.70
15	Baton Rouge, LA	2	2	1	4	3	4	2	3	19.28
16	Augusta, GA	2	2	1	2	4	4	2	3	19.16
17	Greensboro, NC	2	1	2	1	4	4	3	4	18.96
18	Honolulu, HI	4	0	4	-3	5	5	4	5	18.91
19	Allentown, PA	3	2	2	1	4	4	3	3	18.86
20	Provo, UT	3	5	1	-3	5	4	4	2	18.54
21	Greenville, SC	2	2	1	1	4	4	3	3	18.53
22	Oxnard, CA	3	1	4	-1	4	4	3	4	18.52
23	Deltona, FL	3	2	2	0	4	5	3	3	18.28
24	Syracuse, NY	4	5	1	1	3	2	4	2	18.20
25	Worcester, MA	3	1	2	-1	5	4	4	3	17.82
26	Harrisburg, PA	2	0	1	1	4	4	4	3	17.57
27	El Paso, TX	5	1	5	0	3	4	2	2	17.37
28	Spokane, WA	3	2	1	-1	4	5	3	2	17.12
29	Portland, ME	3	3	1	1	4	3	4	1	16.82
30	Toledo, OH	3	2	1	1	4	3	3	3	16.81
31	New Haven, CT	2	2	3	-3	4	4	4	4	16.81
32	Little Rock, AR	2	2	1	0	4	4	3	3	16.61
33	Bakersfield, CA	4	1	4	-1	3	5	1	4	16.45
34	Jackson, MS	2	2	0	1	4	4	2	3	16.44
35	Dayton, OH	2	0	1	1	4	4	4	3	16.23
36	Columbia, SC	2	2	1	-1	4	4	3	3	16.16
37	Springfield, MA	3	1	2	-1	4	4	4	3	15.99
38	Madison, WI	3	3	2	-1	3	2	5	3	15.71
39	Modesto, CA	3	0	4	-2	3	5	1	4	15.42
40	Wichita, KS	3	1	1	-2	4	4	3	3	15.30
41	Knoxville, TN	3	0	1	1	4	4	3	2	14.67
42	Des Moines, IA	2	3	2	-3	4	2	4	3	14.27
43	Chattanooga, TN	4	1	1	-4	4	4	3	3	11.73
43	McAllen, TX	5	0	5	1	1	2	1	1	11.08

Methodology

To determine the best places for businesses owned by members of underrepresented groups, SoFi looked at 50 metro areas across the U.S. with populations of 1 million or less. (Note: A few of the metros didn’t have enough data available for certain criteria and were ultimately removed from consideration in the final scores.)

We then developed a scoring system based on the eight criteria listed below. We graded each of the eight on a 5-point scale, where the top metros in each category received a score of 5. The top possible score was 40.

The following breaks down the methodology and data used for the eight criteria:

Number of Minority-Owned Businesses

Using data from the U.S. Census Bureau’s Annual Business Survey, we looked at the percentage of minority-owned businesses in each metro and compared it to the percentage of minorities in the overall population. Higher scores were given to metros that were closest to a 1:1 ratio of minority population to minority-owned businesses because it represents better minority representation in business.

Business Growth by Minority-Owned Firms

Using data from the U.S. Census Bureau’s Annual Business Survey, we looked at the number of minority-owned businesses in each metro in 2021 and compared it to the number of minority-owned businesses in 2017. Higher scores meant those metros had a higher percentage growth in minority-owned businesses from 2017 to 2021 than those with lower scores.

Immigrant Share of Population

To measure a metro’s immigrant population, we looked at data from Data USA. Metros with higher percentages of immigrants in their overall population scored higher.

Racial Equity Index Rank

Using data from the National Equity Atlas, we looked at the racial equity index, which shows how equitable a region is, based on multiple indicators including whether “communities are seeing progress on racial equity and overall prosperity.” The higher the racial equity index ranking, the higher the score.

Revenue Growth for Firms Owned by People of Color

Using data from the National Equity Atlas, we assessed the change in revenue for businesses owned by people of color. The data compared revenue amounts from 2012 to 2017, the most recent data available. The greater the increase in revenue, the better the metro scored.

Prosperity Score

Using data from the National Equity Atlas, we looked at the prosperity score, which shows how populations are faring compared to how they’re doing in other metro areas, using the following indicators:

•   Median wage

•   Unemployment

•   Poverty

•   Educational attainment

•   Disconnected (not working or in school) youth

•   School poverty

•   Air pollution exposure

•   Commute time

•   Housing burden

The higher the prosperity score, the higher the score.

Inclusion Score

Using data from the National Equity Atlas, we looked at the level of inclusion in the 50 metro areas. The score given by the National Equity Atlas assessed how a specific metro area compared to other areas by looking at the racial gaps across several different indicators. The higher the inclusion score, the higher the score.

Diversity Index

Using data from the National Equity Atlas, we looked at the diversity index scores in the 50 metro areas. The diversity score is a measure of the racial/ethnic diversity of residents based on six major racial/ethnic groups. The highest-scoring metros had the most even mix of all the races listed above.

Recommended: Conventional Business Loans vs SBA

Tips for Minority Business Owners

If you’re starting or expanding a business as an owner from an underrepresented group, these are some of the steps you can take to help make your venture a success.

•   Get certified. A minority-owned business certification isn’t required, but it can help you apply for certain grants and qualify for some government benefits. You can become certified through government agencies such as the SBA’s 8(a) Business Development Program or the National Minority Supplier Development Council.

•   Tap into the available resources. There are a number of government, state, and local organizations working to help minority business owners. For instance, the Minority Business Development Agency, which is part of the U.S. Department of Commerce, provides a range of services and programs, and it can also supply you with relevant research and data.

The Small Business Administration (SBA) offers programs specially for minority business owners. And finally, be sure to check into the programs and resources available from your local Chamber of Commerce as well as local minority business associations.

•   Secure financing. Minority small business grants typically provide funds and opportunities and they don’t have to be repaid. You can also find grants through the SBA, which offers funding programs to start or grow your business.

Finally, you may also want to apply for a loan. SoFi makes it easy to see options for small business loans, and you can get a personalized offer in just minutes.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

With one simple search, see if you qualify and explore quotes for your business.

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SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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A depository institution is a financial institution into which consumers can deposit funds and where they will be safely held. Banks and credit unions are typical examples of these institutions.

Learning about how these institutions work and their pros and cons can build your financial literacy.

What Is a Depository Institution?

A depository institution is a place or entity — such as a bank — that allows consumers and businesses to deposit money, securities, and/or other types of assets. There, the deposit is kept safely and may earn interest.

To share a bit more detail, depository institutions are financial institutions that:

•   Engage in banking activities

•   Are recognized as a bank by either the bank supervisory or monetary authorities of the country it is incorporated in

•   Receive substantial deposits as a part of their regular course of business

•   Can accept demand deposits

In the U.S., all federally insured offices of the following are considered to be depository institutions:

•   Commercial banks

•   Mutual and stock savings banks

•   Savings or building and loan associations

•   Cooperative banks

•   Credit unions

•   International banking facilities of domestic depository institutions

💡 Quick Tip: Make money easy. Open a bank account online so you can manage bills, deposits, transfers — all from one convenient app.

How Do Depository Institutions Work?

A depository can receive funds from consumers and businesses via such means as:

•   Cash

•   Direct deposit

•   Teller or ATM deposits

•   Checks

•   Electronic transfers

The depository institution holds these funds, and they are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per depositor, per ownership category, per insured financial institution. If the institution is a credit union, funds will be similarly protected by the National Credit Union Administration, or NCUA vs. FDIC.

Funds are accessible on demand (aka demand deposits rather than time deposits), and the depository institution is required to keep a certain amount of cash in its vault to ensure it has funds available for clients.

Customers are able to earn interest on different types of deposits. The depository institution also earns interest; it’s one of the ways financial institutions make money. It does so by lending money on deposit to their customers in the form of different types of loans. (For instance, some of the money on deposit might earn the account holder 2% interest, while the bank then uses the funds for a mortgage that charges 6.00% interest. There’s a good profit margin there for the depository institution.)

Recommended: What Is a Community Development Financial Institution?

Types of Depository Institutions

To better understand the purpose depository institutions serve, let’s look at some examples.

Credit Unions

Credit unions may offer many of the same services as banks, but they are owned by account holders, who are also sometimes called members. These institutions are not nonprofits. The profits that the credit union earns are paid to members in the form of dividends or are reinvested into the credit union. To put it another way, the depositors are partial owners of the credit union. You often need to live in a certain area or work at a certain profession to keep your money at a credit union.

Commercial Banks

Commercial banks are what many of us visualize when we hear the term “bank,” whether we are thinking of a major bank with hundreds of brick-and-mortar branches or an online-only entity. They are usually owned by private investors and are for-profit organizations.

Commercial banks tend to offer the most diverse services of all depository institutions, from personal banking to global banking services such as foreign exchange-related services, money management, and investment banking. The offerings may depend on how large the institution is and which customer segments it serves (say, consumers and different types of businesses).

Savings Institutions

Savings institutions are the banks that serve local communities and loan institutions. Local residents deposit their money in these institutions, and in return, they can access credit cards, consumer loans, mortgages, and small business loans.

It’s possible to set up a savings institution as a corporation or as a financial cooperative. The latter makes it possible for depositors to have an ownership share in the saving institution.

Recommended: What Is an Intermediary Bank?

Depository Institutions vs Repositories

Repositories and depositories are two different things despite the fact that their names sound almost the same. Here’s some of the key differences.

•   Depositories hold cash and other assets, but repositories hold abstract things such as intellectual knowledge, files, and data.

•   Depositories are usually credit unions, banks, and savings institutions, while repositories are typically libraries, data-storage facilities, and information-based websites.

Depository Institutions vs Non-Depositories

Unlike depository institutions, non-depository institutions don’t accept demand deposits. These are some of the differences between these two types of institutions:

•   Depository institutions accept deposits and store them for safekeeping. Non-depository institutions, on the other hand, provide financial services but can’t accept demand deposits for safekeeping.

•   Depository institutions are FDIC- or NCUA-insured, while non-depository institutions can be SEC-insured or have another type of insurance.

•   Credit unions and banks are commonly depository institutions. Non-depository institutions are often brokerage firms and insurance companies.

Pros of Depository Institutions

Depository institutions have a few benefits to note:

•   Money is safe and FDIC- or NCUA-insured

•   Accounts can earn interest on time deposits such as certificates of deposit (CDs) and possibly other deposits

•   Helps keep the economy healthy by allowing depository institution to lend out deposits and earn interest

•   Reduced risk of assets being lost or stolen

Cons of Depository Institutions

There are a few downsides to depository institutions. Consider these points:

•   Limited growth potential of deposited funds compared to investments, money market accounts, and CDs

•   Banks, credit unions, and savings institutions may charge fees for holding funds

•   Minimum account balance may be required

Tips for Choosing a Depository Institution

When it comes time to choose a depository institution, it can help to keep the following things in mind when comparing different options.

•   Type. Carefully consider if a credit union, saving institution, or commercial bank is the right fit. Some commercial banks have brick-and-mortar locations, while others offer all of their services online. Online banks usually pay higher interest rates on savings and charge fewer and/or lower fees, since they don’t have the overhead associated with operating branch locations. Credit unions also tend to offer higher interest rates and lower fees as they are not-for-profit as commercial banks are.

•   Features. Look for a depository institution that offers perks and services that suit your needs. Special features may include high interest rates, early access to direct-deposit paychecks, cash back deals, fee-free ATMs, and free access to credit scores.

•   Fees. Shop around to see which depository institution has the lowest and/or fewest fees, such as account maintenance fees and overdraft fees. As noted above, credit unions tend to charge lower and/or fewer fees than commercial banks, as do online banks.

•   Convenience. If you like to bank locally and know your bank tellers and officers, choosing an institution that has branches in your neighborhood is a wise move. If you prefer the seamlessness of banking 24/7 by app, however, you might opt to open an online savings account.

Recommended: What Is an Online Savings Account?

The Takeaway

Commercial banks, credit unions, and savings institutions are all examples of depository institutions. Depository institutions can be places to safely store funds that can then easily be accessed. Funds will typically be insured by either the FDIC or NCUA up to their usual limits of $250,000 per depositor, per ownership category, per insured institution.

Looking for a bank to deposit your money in that pays a great APY?

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.20% APY on SoFi Checking and Savings.

FAQ

What is the difference between a bank and a depository?

There is no difference between a bank and a depository. A bank is a type of depository institution. Credit unions and saving institutions can also be depositories.

What are the types of depository institutions?

There are three main types of depository institutions. Commercial banks, credit unions, and savings institutions are all types of depository institutions.

Are commercial banks depositories?

Yes, commercial banks are one kind of depository institution where consumers can securely stash their money.

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Photo credit: iStock/Mikhail Bogdanov

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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