FDIC Insurance: The Ultimate Protection for Business Deposits

An image of a computer screen with a magnifying glass enlarging the acronym FDIC, which is the ultimate protection for business cash.

Keeping cash on hand to cover day-to-day operations and unexpected costs is an important part of maintaining a successful business, and it is the basis for any cash flow management plan. Because of this, many organizations have established a target level of funds to maintain, in cash or other liquid investments, so they can meet these needs as they arise.

While it’s obvious that having an appropriate reserve of cash is critical, businesses often overlook how their cash is protected. After all, Federal Deposit Insurance Corporation [FDIC] coverage is available at most banks, and it offers the highest level of protection available for business cash. However, it has very important limitations.

Why FDIC Coverage Matters

The FDIC is an independent government agency that was formed after the Great Depression to provide insurance for cash and cash-equivalent deposits made at member financial institutions. When an individual or a business opens an account at a member bank, coverage is automatic for both deposits and earnings.

The FDIC is funded by premiums paid by member institutions and is backed by the full faith and credit of the United States government. Since the FDIC was founded in 1933, no depositor has lost a penny of FDIC-insured funds.

Why Business Deposits Need to be Insured

While rare, bank failures do happen. In fact, from 2001-2021, 561 banks became insolvent and collapsed.

Most commonly, bank failures are seen in times of economic upheaval like the Great Depression, the Savings and Loan Crisis of the 1980s and 1990s, and the Great Recession. In 2008 alone, 25 banks with over $373 billion in assets failed. FDIC insurance makes sure that cash deposits are safe from bank failures, but only up to certain limits.

Limitations to FDIC Coverage

The current FDIC Coverage Limit is $250,000 per owner / ownership category, per insured bank, and this is simply not enough for many businesses. Traditionally, these businesses needed to take several additional steps to achieve full FDIC protection for their cash. This process often required expending a great deal of effort maintaining relationships with multiple banks and reconciling records for each account. Luckily for the business community, those days are over.

With our proprietary fintech, we have reimagined the way that businesses manage their liquid assets. By opening an AMMA™, businesses can achieve extended protection and competitive returns for their cash with a single deposit and a single monthly statement and keep their current bank. AMMA™ is designed to enhance businesses’ current banking relationships, not replace them.

How ADM Provides Businesses with Access to Safety and Competitive Return

Over the last decade, we have developed a nationwide network of financial institutions that bid for business deposits, and this network is the backbone of AMMA™. By leveraging these relationships, we provide our clients with access to nationally competitive interest rates.

When it comes to safety, our AMMA™ delivers. That same nationwide network also allows businesses to spread their cash across multiple banks to achieve 100% FDIC coverage*. While this process is complex, our proprietary fintech makes it simple for our clients and even allows for next-day liquidity.

Earn more, risk less® with ADM.

At ADM, we take the work of business cash management off your plate. In addition to safety and competitive returns for your business deposits, we offer a full suite of cash management solutions. From business escrow to vendor payment processing, we’ve got your business covered.

So, if your organization maintains a large reserve of cash, is looking to make a major purchase, or if you are trying to reduce the work required to manage your business cash, don’t hesitate to contact us. If you’re looking for even more valuable insights on banking, interest rates, and effectively managing your business cash, be sure to check out our Insights page and follow us on LinkedInTwitter and Facebook.

*Funds in an AMMA™ can be deposited with traditional banks or Credit Unions. When funds are deposited at a credit union, NCUA insurance will be available in lieu of FDIC insurance and is functionally equivalent.