Question 1

How is the Brex business account different from a bank account?

Accepted Answer

A Brex business account for startups is not a bank account for startups; it is a cash management account offered by Brex Treasury (a FINRA-registered broker-dealer). Similar to a bank account for startups, you can use your Brex business account for depositing checks and for sending and receiving payments via ACH, check, and wire—even internationally.

Unlike bank accounts for startups, Brex business accounts allow you to choose how your money is stored. You can elect to keep your deposits across multiple banks, and if you do, you’ll be eligible for FDIC insurance up to $6M in total. The other option is to invest your deposits into a government money market mutual fund, or any combination of these two options.

Question 2

Where is my cash actually stored?

Accepted Answer

Brex doesn’t hold customer funds on its balance sheet other than funds in transit. Brex leverages its own broker dealer regulated by FINRA/SEC to sweep (i.e., move money before the end of the day) customer deposits in two ways.

First, funds can be swept into a money-market fund administered by Bank of New York Mellon, a bank with over $1.8 trillion in assets under management and considered one of the 30 systemically important banks to the global economy. This money market fund is AAA-Rated (see prospectus here), has daily liquidity and is designed for preservation of capital and maintenance of liquidity. The fund must hold at least 99.5% of its money in cash or securities backed with the full faith and credit of the U.S. Government.

Customers can also elect to have their funds swept into FDIC-insured partner banks listed here. Importantly, for FDIC swept balances under $6M Unlike a bank account for startups, Brex business accounts limits your exposure to any individual bank to the FDIC cap of $250K so that the full amount of insurance can be provided.

Customers can choose their fund allocation in their Brex dashboard by following the steps here.

Question 3

Is Brex a bank?

Accepted Answer

Brex is not a bank account for startups. To better support startups, Brex offers a cash management account that sweeps customer funds into a network of partner banks and into money market mutual funds. Brex does not lend against deposits, and spreads its risk among multiple banks to maximize FDIC insurance coverage.

Question 4

Is Brex safe from a bank run?

Accepted Answer

Yes, 100% of funds in Brex business accounts for startups are always available for withdrawal, and deposits are never used for lending purposes, which means Brex cannot experience a bank run.

Question 5

What happens to my funds if something happens to Brex?

Accepted Answer

Brex doesn’t hold customer funds on its balance sheet, besides funds in transit. All Brex customer funds are stored into either FDIC-insured accounts or money market funds.

For funds allocated in FDIC-insured accounts, at the end of every day Brex works with a sweep network of banks to distribute funds across a list of partner banks (listed here) to provide FDIC insurance up to $6M. The funds are held in each customer’s name (and not Brex’s), ensuring that the funds of each customer are individually insured by FDIC.

For funds allocated in money market funds, throughout the day Brex places trades to sweep the funds into a AAA-rated money market fund administered by BNY Mellon (a bank with over $1.8 trillion in assets under management) that must hold at least 99.5% in cash or securities backed by the US government. The fund shares are held in each customer’s name, and not Brex’s.

In the unlikely event something happens to Brex, SIPC and FINRA, Brex’s regulator, have access to Brex’s custodial records, along with the records of partner banks and BNY Mellon, to remit those funds back to you. Given the immediate liquidity of all the assets held in Brex business accounts, the remittance of funds should take less than a day. Brex is a broker dealer regulated by FINRA, and all records, processes, systems, and personnel are regularly examined within FINRA guidelines.

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