AUSTIN (KXAN) — The federal government announced Sunday that customers of Silicon Valley banks will have access to their money by Monday.
Banks serve more than half of the tech scene, but small business owners are also cash-strapped. One of them is BOXT, his Austin-based premium wine startup.
Sarah Puil is the founder and CEO of the business.
“We’re super premium wines on tap,” Puyle said. “We are headquartered in Austin. We have a winery in Napa and we actually have a winery in Texas.”
Puil said he was shocked to hear the news that the bank had gone bankrupt.
“I mean, what do we need to do? How do we think about this?” Puyle said.
What caused the collapse?
The bank’s downward spiral began late Wednesday when it surprised investors with news that it would need to raise more than $2 billion to offset losses.
Ben Bentzin, an assistant professor at the University of Texas, said it caused customers to withdraw money.
“As soon as depositors start thinking, ‘Well, maybe my money isn’t safe.’ ‘ said Benzin.
what is being done about it?
The Federal Deposit Insurance Corporation (FDIC), which insures bank money, usually insures accounts up to $250,000. However, many of the banked companies and people known for their ties to technology startups and venture capitalists had more than that amount in their accounts.
“The FDIC has options beyond the insurance level,” Bentzin said. “And if they decide to expand and cover all depositors, the deposits will be perfect.”
On Sunday evening, the Federal Reserve issued a joint statement on the situation with the Treasury Department and the FDIC.
“Depositors will have access to all funds beginning Monday, March 13. Losses related to the Silicon Valley Bank resolution will not be borne by taxpayers,” the press release said. is.
In today’s announcement, Treasury Secretary Janet Yellen emphasized that the federal government will not bail out Silicon Valley banks.
How will your business move forward?
Still, Puyle says she and other small businesses are shaken by what happened.
“Many entrepreneurs look at their company, their team, their capital and say, ‘What do we do? How do we do it? How else do we need to secure it?’ ?” said Puyle.
Her plan is to keep selling as much wine as possible in order to keep the business growing.
“We’re going to raise some more capital to cover the debt so we can keep moving forward,” Puyle said. “This time next year, our boxes will be in everyone’s homes.” And we’re like, “Wow, I remember when the bank collapsed.” “
It was the second largest bank failure in US history, after the Washington Mutual failure in 2008.