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For many small business owners, the process of accessing capital for starting or supporting a newer business can be daunting. Many banks don’t lend to newer businesses because they see it as risky or perhaps there’s limited profit to be gained. This can leave potential borrowers with limited options for funding, which might be required for working capital and other startup costs.

Thankfully, with the growing trend toward microlending, small business owners can obtain loans, typically up to $50,000, to help them with small business financing. While microloans are small, they are often exactly what small business owners need to cover essential costs associated with launching their business.

There are a number of ways for business owners to apply for microloans, including through Small Business Association (SBA) loans, nonprofits, and alternative lenders, but it’s important to understand the different types and how they work to help ensure that you choose the one that best aligns with your business needs.

What Is a Microloan?

There’s no precise microloan definition, but a microloan is typically financing of up to $50,000 that is targeted to small businesses with fewer than five employees.

Community-based microlenders may offer SBA loans or non-SBA loans to small business owners, entrepreneurs, and nonprofit child care centers. Such microlending may provide financing to the smallest of businesses, including new firms that may not qualify for bank loans.

The average SBA microloan is about $13,000, according to the SBA. Microloans for small businesses are typically offered by nonprofits, government agencies, or individual lenders to be used for a variety of business expenses. Microloan programs can differ with focus on specific types of businesses, such as female entrepreneurs, underserved communities, or veterans. Some microloans specify that funds be used for specific purposes.

Microloan uses may include:

•  Working capital

•  Inventory or supplies

•  Furniture or fixtures

•  Machinery or equipment

•  Initial startup expenses

In addition to lending money, some microloan programs offer assistance with things like marketing, financial counseling, training, and technical assistance to support budding entrepreneurs. For new business owners, this support can be valuable to help them responsibly use capital and plan for the future of their business.

Recommended: Typical Small Business Loan Fees

Common Microloan Rates and Terms

Microloan interest rates and terms vary from lender to lender and depend on the type of loan program and the individual borrower’s qualifications. However, they are generally offered as monthly installment loans with fixed interest rates. Terms can vary from a few months to six or seven years. Some lenders may offer longer terms.

Factors that may contribute to loan repayment terms include:

•  Loan amount

•  How funds will be used

•  Specific lender requirements

•  Needs of the borrower

 

Microloan features	Typical microloan terms
Amount	Up to $50,000
Interest rates	Varied
Repayment terms	A few months to seven years

While there are other loan products that small business owners may be able to access, microloans may be a more predictable and sustainable lending option compared to merchant cash advances, which typically have high borrowing costs and less regulatory oversight.

Recommended: Loans for Business Expansion

4 Types of Microloans

To find the right microloan for your business, it helps to understand the different types of microlenders. What is microlending? It’s when community-based organizations offer financing to small businesses and startups with fewer than five employees. Many lenders offer microloans of up to $50K in addition to other loan programs, while some lenders specialize in microlending to specific communities.

Below, you’ll find information on different kinds of microlenders and generally how a microloan works for each type.

1. SBA Microloans

The SBA’s Microloan program provides direct, government-backed loans to intermediary microlenders who can then offer borrowers necessary funding and training to start and run a small business. Loans can be up to $50K with some programs specific to women, veterans, and other underserved communities.

Terms and conditions are negotiated directly with the intermediary lender, not the SBA, but general SBA microloan interest rates and terms are:

 

SBA loan features	Typical SBA loan terms
Max loan term	6 years
Interest rates	Varied

For more information on where to find a local SBA intermediary lender or get more information about microloans, contact your local SBA District Office.

2. Peer-to-Peer (P2P) Microlenders

Peer-to-peer (P2P) business lending allows borrowers to access capital directly from other individuals (investors), without a financial institution acting as a “middle man.” Using online platforms to connect, borrowers can often find funding quickly from lenders who want to invest.

For small business owners with little or bad credit, P2P lending may be a useful resource for accessing microloans. Many investors don’t require the same level of qualifications that a bank or credit union does (like collateral or good credit), but it’s still important to research P2P lenders and their terms and conditions to ensure they meet your business needs and financial outlook.

Recommended: Peer-to-Peer Business Loans

3. Mission-Driven Microlenders

Many microloans are offered by mission-driven lenders who desire to support specific communities and people groups with economic and entrepreneurial opportunities. These microlenders can be nonprofits or Community Development Financial Institutions also known as CDFIs. A few examples of CDFIs include:

•  Community Development Banks

•  Community Development Credit Unions

•  Community Development Loan Funds

•  Community Development Venture Capital Funds

Some microlenders actually maintain CDFI certification, which tells borrowers that an institution is committed to the principles of CDFI. The U.S. Department of the Treasury offers a complete list of CDFIs for borrowers who prefer to apply with microlenders who have CDFI certification.

Recommended: Online Business Loans

4. Online and Alternative Lenders

Alternative small business loans are those offered by individuals or lenders that aren’t a traditional bank. Alternative microlenders may include:

•  Crowdfunding sites

•  Online small business lenders

•  Angel investors

•  Venture capitalists

•  Friends and family

If you’ve been in business for several years and need working capital, small business loans may be right for you. Such financing can come from online lenders and major banks.

Recommended: Peer-to-Peer Business Loans

Pros and Cons of Microlending

For small business owners, microloans may be a vital part of their business success. Yet, even with the advantages, there are some potential risks to be aware of before applying for microloans.

Pros of Microloans

Here are some of the pros of microlending:

•  More flexible borrower qualifications

•  Additional services (training, marketing, counseling)

•  Fast turnaround time on application and access to funding

Cons of Microloans

Here are some of the cons of microlending:

•  Smaller loan amounts

•  Some microloans have limits on how funds can be spent

•  Potentially higher interest rates than a traditional bank

How to Get a Microloan in 4 Steps

Before you apply for a microloan, it’s important to research microlenders and have a thorough understanding of your business financials and goals. The following basic steps may help you prepare to apply for a microloan:

1. Creating a Business Plan

A business plan is helpful when planning for your future and may even be required by some microlenders. Taking time to make a formal business plan may help you assess your needs as you seek out funding. A traditional business plan can include an executive summary of your business goals and mission statement as a small business owner.

2. Determining Eligibility

Microlenders may have their own eligibility requirements depending on the loan program and lender, but in general, small businesses should meet the following criteria:

•  Be the sole business owner or co-owner of a for-profit small business

•  Have no recent bankruptcies, late payments, outstanding tax liens, or foreclosures

•  Have the ability to repay the loan with current income/revenue

•  Proof of good payment history with creditors

•  Have a clear, strong business plan for the future

•  Meet any special demographic requirements (e.g. veteran, minority, low-income), when applicable

There may be startup business loans for business owners with bad credit, but lenders may charge higher rates to compensate for the higher credit risk.

3. Choosing a Microlender

After conducting research based on your business plan and needs, it’s time to choose a microlender. Narrow your search to find a microlender that’s right for you. This may be a nonprofit, community-based organization that offers SBA microloans or a private lender that offers non-SBA microloans.

4. Gathering Documents and Information

Lenders may have different document requirements, so have the following ready to provide with your application or upon request:

•  Government-issued ID

•  Proof of income

•  Business and personal financial statements

•  How you’ll use the microloan

•  A detailed business plan

•  Proof of collateral, if applicable

•  A list of references who can vouch for you personally and professionally

Gathering the above documents and information can streamline the application process when applying for small business loans. You may not qualify for a microloan if you lack proof of identity or proof you’re a small business owner.

Lenders Who Offer Microloans

As mentioned earlier, nonprofits, government agencies, and individual lenders may offer microloans to small business owners.

The SBA provides funding to community-based nonprofits that offer microloans to eligible businesses. States may offer microloans under the State Small Business Credit Initiative (SSBCI), and the U.S. Department of Agriculture has a microloan program for small or nontraditional farm operations.

Private lenders may offer top small business loans for startups, including microloans to entrepreneurs.

Alternatives to Microloans

Here are other financing options you may consider:

Working Capital Loan

A working capital loan is any loan product that covers everyday expenses like payroll, monthly bills, and repairs. Many small businesses rely on working capital loans to manage cash flow fluctuations.

Business Line of Credit

A business line of credit is a short-term loan option that gives borrowers access to cash up to a set credit limit determined by the lender. Interest is paid on the money withdrawn from the credit line. Some lines of credit are revolving, while others end once you use and pay off the full loan amount.

Equipment Financing

An equipment loan is used to purchase business equipment. The length of the loan is typically equal to the expected life span of the equipment. The equipment acts as collateral for the loan. Rates may vary depending on the type of equipment, industry, and qualifications.

Top Small Business Loans

Entrepreneurs may be eligible for microloan funding. In some cases, a microloan may not be sufficient. For instance, a microloan may not be right for you if you need more than $50K.

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 does a microloan work?

A microloan typically works like any other small business loan that has to be repaid over a set term. A microloan can provide small business owners with up to $50,000 in fast funding.

Who is eligible for a microloan?

Small business owners with fewer than five employees may be eligible for a microloan. Entrepreneurs may also be eligible for a microloan.

What is the benefit of a microloan?

The benefit of a microloan is it may provide small business owners with up to $50,000 to meet critical business needs. Community-based nonprofits may offer microloans to entrepreneurs and new small business owners who may be ineligible for traditional financing.

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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.

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.

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.

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For some small business owners, securing capital is crucial. However, getting a bank loan can be challenging for startups or ventures not yet showing much revenue.

Peer-to-peer (P2P) lending is an option for those who want to look beyond traditional banks or credit unions. Keep reading to learn more on what peer-to-peer lending is, how it works, how to qualify for a peer-to-peer loan, and more.

What Is Peer-to-Peer Business Lending?

With P2P lending, a business receives a loan directly from an investor or a group of investors. It eliminates the bank as a middleman, making it easier for borrowers and lenders to connect via online platforms.

For many borrowers, this is a viable form of financing as it offers faster approval and financing at desirable interest rates, even for borrowers with less than perfect credit. For investors, it can be an opportunity to support businesses they believe in.

As with any form of financing, there are pluses and minuses to consider for this form of loan crowdfunding.

Recommended: Learning About Microloans

How Does P2P Business Lending Work?

Peer-to-peer business lending is an alternative form of financing that allows borrowers to directly connect with investors via online platforms. This can be helpful for borrowers who may not qualify for a bank loan, those who desire a faster loan turnaround, or those looking for competitive interest rates.

Peer-to-peer lending for businesses follows this basic process:

1.   A borrower’s credit is assessed with a soft or hard credit pull via the P2P lending platform to begin the process of establishing eligibility. These platforms have different qualifications regarding credit ratings, with some more strict than others.

2.   Based on their credit history and score (among other factors), applicants will be assigned a “loan grade” to help lenders and investors choose the applicant that presents the least amount of risk. The loan grade will typically dictate what interest rates and loan terms you receive.

3.   Borrowers make a listing for their loan, complete with what the loan will be used for, why they’re a smart investment, and other introductory information that helps lenders and investors make a decision.

4.   Lenders then have the opportunity to bid on listings, including the amount they can lend and interest rates offered.

5.   When the business’ listing ends, all qualified bids from lenders combine to form a single loan, which is then deposited directly into the borrower’s account for immediate use.

The P2P lending platforms typically make money by charging fees to both investors and borrowers, like origination or closing fees. When comparing a bank loan to a P2P loan, it’s important for borrowers to consider these fees and interest rates to ensure they’re receiving the right loan for their needs.

Recommended: Unsecured Business Line of Credit for Startups

Typical P2P Rates, Terms, and Amounts

Rates, terms, and loan amounts for peer-to-peer business loans can vary greatly depending on the applicant’s qualifications, investor criteria, and the P2P platform being used. Generally, the platform will determine the interest rate for borrowers based on their qualifications.

Pros and Cons of P2P Business Loans for Borrowers

Peer-to-peer business lending offers both borrowers and investors numerous benefits, but there are also risks involved. Understanding some pros and cons can help you make an educated decision when looking at peer to peer lending for small businesses.

Pros

•  Quick loan application process and funding times.

•  Competitive interest rates for well-qualified borrowers.

•  Access to funding for those who may not qualify with traditional lenders.

•  More personal process as lenders can get to know the borrower’s story based on their profile.

•  Many loans are unsecured.

Cons

•  Limited regulations on peer-to-peer business lending could make this riskier than loans with traditional lenders. Some are not backed by FDIC, as banks are.

•  Some P2P lenders offer small loan amounts, leaving borrowers to seek additional funding elsewhere.

•  Interest rates can vary greatly depending on the borrower’s qualifications.

Common P2P Business Loan Uses

One of the advantages of P2P business lending is that funds can be used for numerous purposes, making it a viable option for many small business owners.

While peer-to-peer business loans may be sought by businesses that don’t qualify for a loan at a traditional bank or lender, almost anyone can apply for P2P loans. Common uses for P2P loan uses include:

•  Peer to peer lending for startup funds

•  Short-term business loans for smaller or urgent purchases

•  Equipment purchases

•  Inventory purchases

•  Cashflow

•  Business renovation and expansion

•  Consolidating with a small business debt consolidation loan or refinancing business debt

5 Tips on Qualifying for a P2P Loan

Before applying for peer-to-peer business lending, check out these valuable tips to help you prepare and hopefully qualify:

1. Collect Documents Before Applying

You may need to provide items like:

•  Tax returns

•  Bank statements

•  Business tax returns

•  A business plan

•  Identifying documents

•  Personal story to share with investors reviewing your P2P inquiry

•  Documents regarding income and outstanding debts

2. Check Your Credit Score

Check both your personal and business credit. Knowing your credit score will help you determine which P2P loans you’re eligible for. If your credit rating is low, you can take steps to improve it, such as paying down debt and paying bills on time.

3. Check Your Eligibility

Most P2P lenders will have basic requirements to apply, such as proof of citizenship, age, residence, and bank account information.

4. Determine What You Can Afford

Assess your business needs and finances to determine how much money you need to borrow and if you can responsibly pay back the loan.

5. See About Pre-Qualifying

P2P lenders who offer pre-qualification typically do so via a soft credit pull (which does not affect your credit score) to check if you meet basic eligibility requirements before applying.

How to Apply for a P2P Business Loan

As with any loan, you’ll want to take steps to make sure you are eligible for the P2P loans you’re applying for. After you’ve determined eligibility, take the following steps to apply for business financing:

Determine the Loan Amount

After assessing your financials to see what you can afford and what you need, determine your loan amount. You may also be able to use this amount when seeking pre-qualification or joining a P2P platform.

Compare Peer-to-Peer Lending Platforms

Research different loan products offered on P2P lending platforms. Take note of the different loan amounts, interest rates, qualifications, and restrictions. Remember that P2P loans are typically for smaller amounts, which means loan terms may be short.

Apply Through a Peer-to-Peer Lending Platforms

Different platforms will have different requirements for approval. However, most will likely assess your credit score and history. From there, they may assign you a “grade” that lets investors know how risky of a borrower you are. Most P2P platforms will also provide you with an interest rate for your loan request. If you approve the rate, you can move on to securing funding.

Set Up Your Peer-to-Peer Loan Listing

If you’re approved to join the P2P platform, the next step is to create a loan listing, or loan request. The process for setting up your loan listing will differ from one P2P platform to the next. In general, you’ll likely have to provide information regarding what your business is, how much money you need, and for what reason.

Investors will then have the chance to review your loan request. Depending on the listing, there may be several investors who each lend a small amount or there could be one or two investors who lend a large amount. Once the bidding period is over, the funds are combined into one loan and made accessible to you.

Alternatives to Peer-to-Peer Business Loans

Peer-to-peer business lending offers loans for a variety of business purposes, but if you need additional funding, consider these other financing options:

Restaurant Loans

Restaurant loans serve the needs of restaurant owners looking to start, renovate, or expand a restaurant business.

Commercial Real Estate Loans

Commercial real estate loans are granted to business entities (individual or group) for a commercial property or land that is solely for business use.

Franchise Financing

If you’re preparing to open a franchise, a franchising loan can help with the expenses, including the franchise license, franchise fees, and necessary startup capital associated with starting a business. In addition to general lenders, there are also franchise companies who specialize in offering loans specifically for franchise owners.

Equipment Financing

Equipment loans are used to purchase equipment necessary for business operation. Loan terms are typically equal to the expected life span of the equipment, and the equipment acts as collateral for the loan. Interest rates can vary depending on the industry, type of equipment, and qualifications.

Microloans

Microloans are those given for smaller amounts, generally $50,000 or less to support small businesses without access to other types of funding. They are often offered by nonprofits, government agencies, or individual lenders to be used for a variety of business expenses and often focus on specific types of borrowers, such as female entrepreneurs, underserved communities, or veterans.

Working Capital Loan

A working capital loan is used to cover everyday expenses like payroll, monthly bills, and repairs. Many small businesses rely on working capital loans to manage short-term cash flow fluctuations due to seasonality, economic changes, or when expanding their business.

Business Line of Credit

A business line of credit is a short-term loan option that gives borrowers access to a set amount of credit, which is determined by the lender, to be used for business expenses like repairs, emergencies, or working capital. Some lines of credit are revolving, while others end once you pay off the loan amount.

SBA Loans

SBA loans are short- or long-term business loans ideal for helping with starting or expanding a business. They are guaranteed by the US Small Business Administration (SBA), making them less risky for lenders. SBA loans have competitive rates and terms for well-qualified borrowers.

Recommended: Business Loans vs. Personal Loans: Which Is Right for You?

Compare P2P Lenders

Peer-to-peer business lending offers borrowers flexibility when choosing the right loan for their particular needs. Whether you’re just getting started or you’ve been in business for years, P2P business lending can help you get the capital you need in a timely manner.

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.

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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.

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Business bank accounts can help owners keep professional transactions separate from personal banking and aid in their business cash management. These accounts often come with special conditions and requirements, and they may have various fees.

Here, we’ll take a closer look at these accounts, their pros and cons, and what it takes to open one. Read on to dive into the details about business bank accounts.

What Is a Business Bank Account?

There are three main types of business banking accounts: checking accounts for everyday use, savings accounts for intermediate and long-term savings, and merchant accounts for accepting debit and credit card payments. In this article, you’ll learn about business checking and savings accounts, available from both online and brick-and-mortar banks.

What Is a Business Checking Account?

A business checking account works much the same way a personal checking account does. You use it to deposit payments and make withdrawals, usually an unlimited amount. Like personal checking accounts, business checking accounts typically pay low to no interest on your balance.

What Is a Business Savings Account?

A business savings account will pay more interest than a checking account, so it can be a good place to park cash on an interim basis. You will likely be limited on how many transactions you can make per month without a penalty (typically six), and there may be a monthly minimum balance to maintain. Many business owners find using both a business checking and savings account can meet their banking needs.

How Long Does Opening a Business Bank Account Take?

If you open up a bank account — whether it’s checking, savings, or both — the time commitment needed is usually similar to that of opening a personal checking and savings account. It will likely take just a matter of minutes if you have the necessary information on hand.

•   You will need to provide some details about yourself, your business, and any additional business owners involved in your enterprise.

•   You’ll deposit funds.

•  Keep in mind it can take up to seven business days for final approval before you can actually access funds.

What Is Needed to Open a Business Bank Account?

Whether you open your bank account online or in person, you’ll need documentation of several personal and business details. Different banks may have their own verification requirements, depending on the type of business you own and the type of account you’re looking to open.

Here is a general list of what you might need to open a bank account for your business:

•   Your name, birthdate, and Social Security number

•   Mailing address and all contact information

•   What percentage you own of the business (anyone who owns 25% of the business or more will likely have to disclose personal details and identification)

•   A government-issued photo ID, such as driver’s license or passport

•   Business name and DBA (“doing business as” name) or trade name, if applicable

•   Business address and employer identification number (EIN) (Note: sometimes Social Security numbers suffice)

•   Industry/type of business

Depending on the type of business you own, you may be asked for the following documents:

•   Sole proprietorships may need the business name registration certificate and the business license.

•   Partnerships may need the partnership agreement, business name registration certificate, business license, and the state certificate of partnership.

•   Limited Liability Companies (LLCs) may need the articles of organization, LLC operating agreement, and business license.

•   Corporations may need articles of incorporation, corporate bylaws, and business licenses.

Recommended: Business Cash Management: Tips for Managing Cash

What to Look for in a Business Banking Account

Traditional banks, online banks, and credit unions all offer business bank accounts. All have different fee structures and provide different services. There are many fees and restrictions to consider when choosing a business banking account. But consider this overarching factor: online accounts are usually best for businesses that don’t need to make bank deposits.

Here’s what to compare when you’re looking for an account:

•   Monthly fees, such as account maintenance

•   Any minimum balance requirements

•   No-fee transactions

•   ATM access (for deposits and withdrawals)

•   Transfer, wiring, and payment capabilities

•   Incidental fees (such as, stop payment, overdraft, and nonsufficient funds)

•   Online and mobile banking tools

•   Additional features, such as invoicing, bill pay, or integrations with other business tools (especially tax reporting software)

Benefits of Opening a Business Banking Account

A business account can be a smart tool for a variety of reasons. Business owners may need to keep their personal and business accounts separate for tax and liability reasons. A business bank account also helps you establish a banking relationship that you can draw on in the future for lending or other services that may help your business grow. You will also establish a financial record that can come in handy when it comes time to file taxes and help your concern establish a good credit rating.

Recommended: How to Open a Business Checking Account

Cons of Opening a Business Banking Account

There are very few cases when a business banking account is a bad idea. Some very small sole proprietors may find they don’t need the extra fees and bookkeeping involved. But for most business owners, a separate account can be an efficient tool.

That said, one of the potential drawbacks of a business account is the cost of bank fees. High fees that you may not have anticipated can eat into your business profits. Some fees to look out for include:

•   Monthly fees

•   Transaction fees

•   Monthly balance transfer fees

•   Cash deposit fees

•   ATM fees

•   Wire transfer fees.

These fees add up fast. Be sure to check thoroughly what fees are involved and compare from one financial institution to another.

Pros of a Business Bank Account	Cons of a Business Bank Account
Keeps professional finances separate from personal	May involve additional fees
Establishes a business relationship with a financial institution	May involve more bookkeeping
Creates a financial record that can be useful for tax or credit-rating purposes

Choosing a Business Bank Account

Now that you’ve looked at fees, here are some other considerations as you choose your business bank account:

•   Banking online: Business bank accounts with online-only banks can be great for virtual businesses or any business that is not handling daily cash transactions. Many online banks do not require a monthly minimum balance.

•   Network: If you’re banking in person, be sure there is a conveniently located branch near your business. Also, find out how many no-fee ATMs are available in your area.

•   Electronic services: Check if online bill pay, electronic fund transfers, and other electronic services that can support your business are available for low or no fees.

•   Electronic payments: Does your bank accept Zelle and Venmo? If so, are there additional fees involved? How long will it take for transactions to post? Electronic payments are increasingly becoming the lifeblood of many businesses.

•   Software compatibility: Is the bank account you’re considering compatible with the bookkeeping software you use? That can make life easier when you need to track or get access to cash flow, outstanding receivables, and other items each month.

Other support: Does the bank offer small business loans, lines of credit, business credit cards, and other financial support for entrepreneurs that you may need in the future?

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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.

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.

Our account fee policy is subject to change at any time.

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