Fintechs Raise the Stakes for Small Business Banking With Higher Yields

ELIZABETHTOWN, KY – January 15, 2026 – In a direct challenge to the minimal returns offered by traditional business banking, fintech platform LiaFi announced it has increased the interest rate on its business account to 3.10% APY. The move highlights a growing trend where technology firms are leveraging strategic bank partnerships to unlock significant value from the idle cash held by small and medium-sized businesses (SMBs).

For years, the cash reserves sitting in typical business checking accounts have earned next to nothing, with the national average hovering at a mere 0.07% APY, according to the FDIC. LiaFi’s rate increase means that a business holding $50,000 in surplus cash could now earn approximately $1,550 annually, a stark contrast to the roughly $35 earned in a conventional account. This difference represents tangible capital that can be reinvested into marketing, equipment, or offsetting inflationary pressures.

“We’re passionate about small business and built LiaFi on the belief that they deserve to earn meaningful interest,” said Bruce Hrovat, Founder and CEO of LiaFi, in the company's announcement. “That’s why we’re proud to offer a leading rate that helps business owners earn more from the cash they already have.”

The New Competitive Landscape for Business Deposits

LiaFi's 3.10% APY enters a fiercely competitive market where a new generation of digital banks and fintech platforms are vying for the attention of cash-conscious business owners. This new battleground is defined by high-yield savings products that were once the exclusive domain of personal finance. Competitors like Axos Bank with its 3.60% APY Business Premium Savings and Live Oak Bank offering 3.00% APY on its business savings have already set a high bar.

However, the headline rate often tells only part of the story. Many high-yield accounts come with conditions, such as minimum balance requirements to avoid fees, transaction limits, or activity quotas like a minimum number of debit card purchases. For example, some offerings may require a balance of over $25,000 to earn the top-tier interest rate.

This is where LiaFi aims to differentiate itself. The company emphasizes a model of simplicity and accessibility, promising its 3.10% APY with no lockup periods, no qualifying requirements, no transfer limits, and no fees. This approach is designed to eliminate the friction that often prevents small businesses from optimizing their cash. Instead of completely switching banks—a daunting prospect for any established business—LiaFi integrates with a company's existing bank accounts. Business owners can securely link their primary checking account and seamlessly transfer surplus funds to the high-yield LiaFi account, moving it back just as easily when needed for payroll or expenses.

A Financial Lifeline for Main Street

For small businesses navigating a volatile economic climate, the ability to generate substantial, low-risk returns on cash reserves is more than a convenience; it can be a critical lifeline. With rising operational costs and persistent inflation, every dollar counts. The shift from earning virtually zero interest to over 3% transforms idle cash from a dormant asset into a productive one.

This value proposition is resonating deeply within the SMB community. Recent industry studies show overwhelming satisfaction with fintech solutions, with 95% of small business users believing these platforms better meet their financial needs than traditional banks. The primary drivers for this rapid adoption are efficiency, cost reduction, and access to powerful financial tools. Fintech platforms automate tedious tasks, provide real-time financial visibility, and offer streamlined access to capital.

By providing a straightforward way to boost earnings, platforms like LiaFi are empowering business owners to take a more active role in their financial management. The additional income generated can create a crucial buffer, fund strategic growth initiatives, or simply improve the company’s overall financial health without requiring any change to its core operations.

The Power of the Hybrid Model: Technology Meets Trust

LiaFi’s offering is made possible through a modern financial structure known as the "hybrid model" or "Banking-as-a-Service" (BaaS). In this arrangement, a technology-focused company like LiaFi develops the user-facing platform, app, and customer experience, while a chartered, FDIC-member bank provides the underlying regulatory and banking infrastructure.

LiaFi’s partner is Magnolia Bank, a Kentucky-based community bank with roots stretching back to 1919. This partnership combines fintech agility with the trust and security of a long-established financial institution. All deposits made into a LiaFi Business Account are held at Magnolia Bank, making them eligible for FDIC insurance up to the standard limits. This structure aims to give business owners the best of both worlds: a modern, user-friendly digital interface and the peace of mind that comes with traditional banking safeguards.

However, this rapidly growing sector is not without its challenges and is drawing increased attention from regulators. In 2023, the FDIC, Federal Reserve, and the Office of the Comptroller of the Currency (OCC) issued updated joint guidance on third-party risk management. This guidance underscores that the partner bank—in this case, Magnolia Bank—retains ultimate responsibility for ensuring all activities are conducted safely and in compliance with all laws, including consumer protection and anti-money laundering regulations. The collapse of other fintech intermediaries has intensified this scrutiny, pushing regulators to ensure that banks maintain robust oversight of their fintech partners and have clear, real-time records of customer funds.

Redefining Expectations in Business Banking

The emergence of high-yield, liquid accounts for businesses signals a fundamental shift in the financial services landscape. For decades, the complexity and inertia of business banking meant that optimizing cash reserves was a low priority for many entrepreneurs who were focused on their day-to-day operations. Traditional banks, facing little competition in this space, had minimal incentive to offer competitive rates on business deposits.

Fintech innovators have shattered that status quo. By leveraging technology to create simple, integrated, and high-value products, they are forcing the entire industry to reconsider its offerings for small businesses. The core innovation is not just the higher interest rate itself, but the removal of barriers to accessing it. The ability to link an existing account in minutes and move funds freely without penalties or complex requirements empowers business owners to make their money work for them effortlessly.

This competitive pressure is ultimately a major win for the small business community. As more platforms enter the market and traditional institutions are compelled to respond, business owners gain more choices and better tools to strengthen their financial foundations. The expectation is no longer that business cash should sit idle, but that it should be an active contributor to the company's success.