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Comment by gfsdgsfgfds | Hacker News Reader

Just one anecdote of many. I'm a founder of a bootstrapped startup. We are/were with SVB. On Thursday I tried to get a Brex cash account setup to move some operational cash there but it didn't happen in time. I thought of wiring money out of SVB to my personal account but decided it felt too dodgy. Payroll for 2 weeks ending March 15th had to be funded through Gusto by tomorrow (March 13th). So I did all I could do without delaying payroll, dropped my salary to near zero and wired the payroll money to Gusto from my personal checking account. Being bootstrapped and low headcount this was possible. I'll have to retrospectively do some loan paperwork I guess. It would have been a tougher comms to staff if I didn't happen to have enough liquidity personally.

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i had to do this once during a clerical fuckup with our payroll provider.

the accountants just classified it as a reimbursed expense. you just comp yourself the exact same amount as the payroll and it isn't taxed as income.

in general accountants have ways of dealing with all sorts of edge cases, but you need to keep REALLY good documentation and notes about what/why/how, etc. "i thought the bank was going to collapse, and then it did" is a pretty good reason.

wiring yourself the money and moving it to a new business bank account would have been perfectly fine too - you're simply moving the cash to another location. in fact i'm pretty sure that's what most people who got their money out of svb did - very few small businesses have multiple checking accounts.

Where I live most checking accounts have transfer limits you'd run into when trying to pass the money out of your personal account again.

Not a lawyer, but I would be pretty comfortable with SVB -> personal account if you documented why and communicated about it in advance with board/counsel. (Obviously the next step would be opening a Chase/etc. account and sending the funds on to that, not using your personal account for company business on an ongoing basis, but a limited number of emergency transactions should be fine.)

Isn’t it generally a cardinal sin of business finance though?

Also nal and naa but no: it's "comingling" that's bad. If you explicitly document the transactions, don't do it all the time, and ideally use matching amounts in and out, it's not comingling.

Comingling is. In this case there is a clearly articulable reason why ("our bank is going out of business"), and it's temporary, documented, etc. The twin risks to avoid are appearance of embezzlement, and appearance that you're treating the business account and personal account as one (which potentially allows piercing corporate veil/attaching personal assets), but if your building is on fire, you're allowed to break the window to rescue the kitten.

Not if it’s documented, short-term and for a very extraordinary reason.

Interesting that its viewed so critically in the US.

If documented its no problem and not uncommon at all in Germany.

In fact many business owners pay something like credit card bills personally and reimburse through the company later.

Wouldn't this be other way around. First pay yourself and then spend that money on company bills? Which sounds very iffy to me as European.

That is far more common in the US (basically paying expenses on your personal cards, expensing to the company after the fact). You can also advance on some expenses sometimes (this can be abused so there are some accounting restrictions on how you'd do it, etc.).

What is weird/scary (especially when not documented clearly and in advance) is moving your entire bank balance into a personal account. Aside from government/tax/legal, you'd have your investors (in a venture/angel backed company) to justify it to. It's justifiable in this truly exceptional case of SVB imploding and no other bank account being available. (It gets harder to justify in a larger company with lots of investors and more money involved; moving a $100mm balance in a company where you were down to 10% ownership to a personal account even in this situation would be weird AF and depending on the banks involved might cause you problems. I probably still would have emailed counsel and investors/etc. on thursday morning to ask what to do; likely would have sent it to lawyers to handle actually in the huge-account situation.)

I see. That makes sense. Thank you for clarifying.

Also, imagine the case where you do this and you're wrong. You panic but you're in the minority and there's no bank run and a week or two goes by and the bank is still fine.

Now you've got a weird thing to explain and no vindication.

Philosophical problem of "justified true belief"/Gettier problem. (https://en.wikipedia.org/wiki/Gettier_problem -- I learned about this from one of the Rap Genius founders when I was back in YC, lol.)

Generally the law handles this through the "reasonable man" standard; i.e. "would a reasonable man, knowing what you did at the time, have done what you did?" This would allow you to shoot someone in self-defense who was holding a realistic looking toy gun at a child (which you believed to be a real gun, unlawful intent, etc. at the time).

It's an "antipattern" (and usually a strong sign that something is badly wrong) but it's not illegal... "sinful" is a useful hint that something is "norm" related.

Yeah, I didn’t say illegal. Often “cardinal sin” is just a playful way of saying “something thou shalt never do.”

If you're not a lawyer, in this case, it's not really relevant what your comfort level is with business dealings. If you're a professional with appropriately relevant skills and expertise, I'd rescind my comment.

I’m a business owner with payroll married to a attorney.

I’m comfortable doing exactly as GP described to make payroll.

Thank you; contextually I must rescind my previous comment.

Given the disaster and nearly unprecedented nature of these events I doubt anyone would bat an eye at a CEO taking the decisive action to do what needs to be done to survive (and fix it later). For many the past few days have been the startup equivalent of "fog of war".

As others have noted it's not embezzlement/commingling and given the scenario "Wire out from SVB corp account to personal, document exact amount, and wire back to corp $NEWBANK a week/days later, document again" would hardly cause any heartburn now or down the road. Many would see it as responsible, proactive, and heroic.

Depending on the amount the only issue would likely come from your personal bank - I know of people with ~$10m at SVB and I have to imagine all of sudden wiring those kinds of funds to a personal account with an average daily balance that's a fraction of that would raise some alarms on the personal account - or maybe not as I can imagine the big big banks (BoA, etc) probably saw a lot of this on Thursday...

FWIW, on Thursday it wasn’t clear to me I had so little time to get money out and part of me felt like contributing to a bank run, before it was clear there was a bank run, was not being a good citizen. Still not sure how I feel about it all. SVB staff were great over the 10+ years we banked there. Tech was always crap but I liked the people. Very sad all around.

I totally agree re "contributing to a bank run" feeling shitty, but you have more obligation to your employees (especially), investors, and customers IMO than to your vendor (the bank). Congrats for being able to cover the payroll regardless, though.

(I am pretty confident there will be at least 250k + 50% advance-dividend early this week, and still optimistic but far from certain that a buyer will take the whole thing and it will be 100%. Last time people actually took losses of 50% above the FDIC amount (100k at the time) was 2008 (IndyMac).)

That's where I was.

My startup has about $25k in SVB - but we don't have payroll and I have personal access to that without impacting me if push came to shove (paying contractors, etc). I was aware of the situation and probably could have gotten the funds out but I knew we were well below the FDIC threshold and just didn't want to bother with it (frankly). I would have had more anxiety executing the wire and waiting for it to show up on the other side...

Speaking personally I'm actually kind of curious to see what the FDIC process looks like - in the grand scheme of things it makes you part of a relatively small club! While I know people are suffering and the situation is a lot worse for many I'm actually looking forward to telling the story when appropriate.

The general population is already fascinated by startups and I've had more than a few "civilian" friends reach out to me asking about the SVB situation. When I tell them we're kind of impacted but not really they just kind of chalk it up to another "Wow, startup life is so wild even THE BANK failed".

Additionally I'd say the same - through various startups I've worked with SVB for over 15 years and the people have always been great (systems not so much).

For others who might be in the same position, it might be worth contacting your payroll processor. Ours, justworks, indicated that we could wire them the money on the invoice processing day and still make payroll. (That will be either Monday or Tuesday, I forget which - we somehow got really lucky; our payroll ACH got pulled right before the shutdown)

How much cash do you have available?

Other threads over the past few days scoffed at having 100-200k in cash available.

after being here for over 10 years (not on this account), i've observed that hn is basically split into two groups: people with money, and people who don't have much of it.

the people with less money are much more vocal about it, for obvious reasons.

What you state is perhaps obvious, I would not even bother to open a new account to conceal my identity just to say that...

It is a bimodal distribution of (1) the lucky ones and (2) the ones either "not yet lucky" ones (1/10) or the "never lucky"ones (9/10).

I find it refreshing to hear stories about how things did _not_ work out (from the sources). It is much harder to get the real stories behind the successes because people tend not to ascribe things to luck but create some story after the fact in the same way, as they say, "the winner writes the history".

if you believe in good luck, do you believe in bad luck? you frame it as "not lucky" instead of "bad luck".

in other words, if you ascribe success to nothing in particular other than luck, why do you put more stock in the negative case? couldn't failure be caused by nothing other than bad luck?

reading failure stories to look for what to avoid might not be the right strategy if you believe in a world where luck dominates.

Your 2 week payroll is more than $250,000 and you are bootstrapped?

I call B.S.

Something doesn't add up. Coming from an anon account no less.

It is not. SVB account is frozen. Nothing in or out. Wire had to land March 13th so had to be sent Friday.

A wire on the 13th lands on the 13th.

My personal bank is Bank of America. I paid the $30 to do "1 business day" I read that as if I did it on Monday it would land Tuesday. Gusto was saying it had to be funded by Monday. Perhaps it would have worked out fine that funds would be unlocked on Monday and Gusto would have been fine with wire initiated on Monday, but this was Friday and everything seemed on fire.

FWIW, Just looked at the screenshot of the wire completion and it does say "Same day". But I did it at after 8pm. Anyway, I felt I did the safest thing to keep the staff from freaking out and for me not to be too stressed through the weekend. I'll have enough headaches moving banks the next two weeks to also be worried about payroll.

A wire can commonly take up to two days; just FYSA.

https://www.investopedia.com/terms/w/wiretransfer.asp

Got it. So you are unfamiliar with the wire system. Most people are. I actually don't have anything good to say about it. (Sidenote: 24/7 crypto is far better, but crypto is still a bit of a wild west so I don't recommend for people who aren't comfortable being early adopters)

You are learning a lot and sounds like you figured out a way to not have your employees see any hiccup. Well done.

Thank you for replying and providing more info.

Nowadays one must assume ChatGPT bot/shill when talking to a new account.

An actual "wire" transfer yes, but op may have meant ACH.

People don't have access to that $250k right now, it takes time.

Everyone will have $250K tomorrow.

As an owner who feels responsible to your staff, and who feels bewildered by the sudden closure of your bank, you may not trust what you think you know.

Securing alternative funding for your payroll makes sense and is commendable.

Uh yeah, in the very unlikely event that you find yourself explaining to your staff why payroll hasn’t been run, about the last thing you want to lead with is “Well, see, after our our bank failed, I assumed…”

FDIC insured funds haven’t been disbursed yet right?

> FDIC insured funds haven’t been disbursed yet right?

The bank was closed on Friday, and at the time an announcement was made that the Deposit Insurance National Bank of Santa Clara would open with all insured deposits on Monday (this will not happen if between now and Monday a buyer is found and that bank instead takes over operations on Monday.) There’s not really a “disbursement” of insured funds, just a transfer to a new bank, which may or may not be run by the Federal government.

For uninsured funds, the announced plan (which also might be cancelled if a bank takeover provides better terms for them) is to provide an initial dividend during the week, and a “receivership certificate” for any remaining uninsured balances. Most likely (given history) a bank takeover would also preserve uninsured balances as normal deposits at the new bank; but that’s not guaranteed.

As of about an hour ago, the government through some weird indirection is basically guaranteeing 100% of the par value of all the assets, so SVB or the DNIBoCA (I guess? honestly not sure which) should re-open Monday AM with 100% of assets available to depositors. i.e. bullet dodged.

Hacker News is full of people who believe anything they read on this site if it fits the narrative, even if it is from a throw-away account that clearly doesn't understand the banking system.

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