Fintech startup Brex ends small business cash management: What’s next for account holders?

Brex, popular corporate management spend startup, announced that it would shift its focus away from the small business market — the core segment Brex started out to serve. The small business owner typically supported by Brex is now deemed “no longer qualified” for their Brex Cash alternative banking option and will lose access to their account by August 15, 2022.  

Sadly, this is not an isolated incident in the world of small business. The small business community is already challenged by significant rate increases. Coupled with inflation and supply change issues, small business owners have enough to balance without losing confidence in their cash management solution.  

So what does this shift in strategy mean for Brex users and business banking as a whole? We discuss what you need to know about the Brex Cash closure and how Nav can help you find the best cash management solutions for your business moving forward.

What is Brex?

Brex was founded in 2017 as a fintech providing corporate cards options for small businesses and startups in the U.S. Over time, Brex expanded with the goal of serving the small business community with a robust financial operating system. Part of that model included Brex Cash, a cash flow management tool. 

The Brex Cash management tool allowed small businesses to control their cash flow more efficiently. While Brex Cash functioned similarly to a traditional business bank account (users could send and receive payments via ACH, deposit checks, and manage spend among different users), it was not a bank account. 

Why is Brex ending my account?

Over the last five years, Brex’s business model has shifted away from serving the traditional small business owner and towards larger scale operations. 

Earlier this year Brex announced new partnerships that would initiate its expansion into new software tools supporting technology startups and larger companies. Shortly after, it became clear Brex couldn’t fulfill the needs of both customers and decided to stop serving small businesses.  

Brex narrowed its definition of entrepreneurs from small businesses and startups to only business that had some sort of “professional funding” — in other words, venture capital, angel investors or funding from an accelerator. 

Brex accounts will remain active until August 15, 2022. Afterwards, Brex Cash customers will no longer be able to use their account or transact on their Brex card. Brex is encouraging current customers to connect another bank account or alternative platform to transfer any account balance prior to the August 15th deadline.

Can I still use my Brex Card?

Brex Cash users are still able to use their Brex corporate charge card up until the August 15, 2022 deadline.

Fortunately, there are many credit card options that offer similar benefits like 0% APR and cashback rewards.

Alternatives to Brex Cash account

Brex Cash management tool, while not a traditional bank account, functioned very similarly. Account holders had a routing number, the ability to make deposits, and send payments (ACH, wire, checks).

Similar features (and more) are available through a small business checking account. It may help increase your likelihood of approval for financing, boost your legitimacy to lenders, streamline your cash flow management, and organize your finances for tax season. 

Nav compiled the account details of the best business checking partners so you can find the right solutions for your business needs. See your best business checking options in one place.

Do I need a business bank account?

While some small business owners chose to manage their personal and business finances in the same place, there are several benefits to separating them. 

• You’ll expand your ability to accept different types of payments. Bank accounts can make it easier to accept mobile payments like Cash App and Square. It also makes it easier to accept payments for invoices, services, and physical products. 
• It significantly minimizes personal liability. As a sole proprietor, you’d be putting your personal finances at risk in the case of business debts or lawsuits.
• You’ll make it easier on yourself at tax time. A business account makes it easier to track income and business expenses or track deductions all while keeping your personal expenses separate. 
• It’s easier to apply for financing. A separate business bank account can make you more attractive to potential lenders. If requested, you’ll be able to share your financial statements and income tax returns quickly. 

How to choose the right business bank account

There are several factors that go into your choice of business bank account: the type of small business you own, your financial needs to support that business, your annual revenue, if you need others on the account, and more. 

Some small business owners choose to open a business account where they have their personal bank account. While that may work for some, the convenience of an existing partnership may not be the best fit for your needs. 

At minimum, the bank you choose should be a Member FDIC or Member NCUA to ensure your money is safe. From there, you’ll want to look at the details of the accounts available to you. Are there fees? If so, how much? Is there a minimum balance? Is there a physical location or is it online-only? Do they have an app to allow you to manage your funds on the go? 

Setting up a business account may seem like a daunting task, but Nav has the resources to help you make the best decision for your business. Compare the best business checking accounts now. 

Best business bank accounts for entrepreneurs

Not all small business bank accounts are created equal. When selecting the right business bank account, consider your day-to-day needs and what sort of account features would best support those needs. Consider things like accessibility, perks on things you already spend on, required balances and if it’s realistic for your cash flow, etc. 

Compare the details of these reliable business bank accounts: 

What do I need to open a business bank account

The documents required to open a business bank account vary based on the bank and your banking needs. Generally, you will need prepare the following documents for your application:

• Business details like your name or your DBA, business address, EIN, and other contact information.
• Personal details like your Social Security number, driver’s license, and additional proof of identification.
• Business formation documents if you run a partnership, corporation, or LLC.

How do small businesses obtain financing for their business?

There are several benefits to opening a business bank account, and access to funding is one of them. A business bank account helps a potential lender see a clear picture of your business finances and establish what kind of funding you qualify for. Without a business bank account, you may have trouble establishing business credit.  

Get expert insights on your next business bank account

Nav supports companies of all sizes and has the business bank accounts to match. Whether you’re looking to improve your cash flow monitoring or want to protect yourself from potential liabilities in the future, a business bank account may be right for you — and better yet, Nav can help you find it. 

In addition to small business loans and small business credit cards, Nav has a portfolio of business bank account partners available to support the success of entrepreneurs like you. Compare your business checking options now.