New Offerings in the Digital Small Business Banking Space

When it comes to banking services, small business owners need different things at different times. But the options for where to go for your business checking, cash flow management, and credit lines continue to expand.

Here’s a snapshot of the latest in small business banking, including newcomers in the digital banking arena.

AmEx now offering a no-fee checking account. American Express recently announced its first checking account for small businesses.

“Small businesses should not have to sacrifice the features they expect from a bank in order to experience the benefits of an affordable business checking account,” said Gina Taylor Cotter, Senior Vice President of Strategy and Business Operations at Kabbage, in a press release.

The credit card company is using technology it acquired last year – with the purchase of online lender Kabbage – to offer small businesses a fee-free business account and other new digital cash flow services.

The new checking account, Kabbage Checking, “gives small businesses the flexibility of mobile banking, from in-app account management to mobile check deposits, with the convenience of a traditional bank—including in-person cash deposits, free ATM access, and a compelling APY to directly support our customers’ growth,” Cotter said.

Kabbage Checking, available now to U.S. small businesses, marks the first of several new digital cash flow management solutions from American Express. Also new to its offerings are savings accounts for small businesses.

Square may be offering small business checking soon. According to Bloomberg, the POS company Square is preparing to roll out a checking and savings account for small business owners.

Square, which already offers loans and other services to small businesses, acquired a banking charter in March 2021.  Its new, expected checking account will reportedly carry no overdraft, minimum balance or service fees.

And small business owners will be able to immediately have access to funds in their checking account from transactions conducted in Square, according to the Bloomberg article by Mark Gurman, Kurt Wagner and Jennifer Surane.

The reporters cited evidence of Square’s plan for a checking account offering in code in a recent update to Square's app for Apple's iPhone and iPad.

More competition for small business banking. It’s been about a decade since online lenders started emerging as viable competitors to big business banking players and traditional credit services like JPMorgan and Wells Fargo & Co.

CNBC banking reporter Hugh Son calls Kabbage Checking from American Express as the latest move to shake up the increasingly competitive world of digital small business banking.

AmEx began piloting the fintech services to its cardholders earlier this year, when it started offering credit lines of $1,000 to $150,000 to businesses, leaning on Kabbage’s automated underwriting software, he adds.

“American Express, best known for its array of personal and corporate cards, is making a push into territory held by banks and a growing list of fintech players.” says Son in a CNBC story.

Another offering in its services aimed at entrepreneurs and small business owners, Kabbage Checking is a no-fee digital account pays 1.1% interest on up to $100,000 in balances, mobile check deposits, a debit card, bill pay and targeted savings features.

“The checking account is sort of the financial operating system for a business, it’s one of the first things a business gets” after being created, Kabbage co-founder Kathryn Petralia said in an interview with CNBC’s Son.

“With the record number of new businesses being created last year, we think it’s important to help them get products that a brand new business wouldn’t be able to get from a traditional institution.”