Top rate for Incorporated businesses | Small business accounts | Discussion forum

I wish you good luck with that. I have yet to see a HISA for small business that pays much over 1% and often far less. As with most things small biz, once the banks see the biz part they try and screw you into the ground.

Our retained earnings over the years have gone into a 5 year GIC ladder. Even then, most GIC rates that you see (especially the higher ones with smaller institutions) are not available to small biz either.

I maintain a small list of which banks and CU will and won't sell to small biz, if you ever need it.

Hi Max,
My corporation has a BMO Investor Line account and much of my cash is in BMO's ISA called ATT770. It pays 0.75% and can be converted to cash in 2 or 3 days as needed. One thing to remember is that interest income is generally taxed at very high rates in corporations - in the neighbourhood of 50%. CRA definitey does not encourage businesses to hold interest bearing products.

Cheers,
MG

MG said
Hi Max,
My corporation has a BMO Investor Line account and much of my cash is in BMO's ISA called ATT770. It pays 0.75% and can be converted to cash in 2 or 3 days as needed. One thing to remember is that interest income is generally taxed at very high rates in corporations - in the neighbourhood of 50%. CRA definitey does not encourage businesses to hold interest bearing products.
Cheers,
MG

I do the same thing through the TDDI trading account for my holding company.
With TD, they have four ISA versions all also paying 0.75%
They are called TDB8150/8155/8157/8159.
The money is CDIC covered up to the regular coverage limit.

Alterna Bank does not offer any business savings accounts. However, its parent, Alterna Savings, does. The rates are not very impressive:

Has anyone seen a high interest savings account for small incorporated business?

Many banks and credit unions do not offer a high interest savings account for small incorporated business.

An example is Manulife Bank (CDIC insured) that has a promo rate of 2.75% for personal funds, but only 1.2% for small business.

I have only found Oaken (CDIC insured) -- but most offer 1% to 1.4% lower rates than personal rates. Canadian Western Bank (CDIC insured) says they do. But I need a 3rd CDIC insured financial institution

Thanks

Norman1 said
Alterna Bank does not offer any business savings accounts. However, its parent, Alterna Savings, does. The rates are not very impressive:

Business Investment Savings Account	Rates
$0.01 - $4,999.99	0.15%
$5,000.00 and Over	0.70%

  

We used to have business accounts there. The fees were unpleasant. Before that, we had the accounts at one of the Big Five, and they had unpleasant fees too!

I'm wondering if there are any updates to this thread.
I have been asked to recommend a FI for a registered charity for term deposits or GICs. I'm not yet sure what length of terms they are looking at. They might be interested in a better savings / chequing option too.
It's a charity with national scope but I understand the principals are in Ontario.
So far, I'm thinking Oaken, Meridian, maybe DUCA, as well as TD 8150 etc. or possibly a deposit broker (I know they deal with corporate customers). They are currently with TD.

Koogie, could you post a link to your list? Thx.

Loonie said
I'm wondering if there are any updates to this thread.
I have been asked to recommend a FI for a registered charity for term deposits or GICs. I'm not yet sure what length of terms they are looking at. They might be interested in a better savings / chequing option too.
It's a charity with national scope but I understand the principals are in Ontario.
So far, I'm thinking Oaken, Meridian, maybe DUCA, as well as TD 8150 etc. or possibly a deposit broker (I know they deal with corporate customers). They are currently with TD.

Koogie, could you post a link to your list? Thx.  

Oaken, assuming they have business savings accounts and/or GICs (I think they do), would probably be a good choice. I wouldn't normally recommend Tangerine, but Tangerine has been particularly focused on growing its business deposits (at the expense of cutting rates and promos to personal clients). I was just offered 2.75% in a HISA until the end of the year, but they said that also applied to Business Savings Accounts. Their GIC rates, which are higher than Meridian and on par with EQ Bank, are offered the same rate as personal deposits. So that'd probably be my second pick. Being a national player, there'd be no challenges with regard to residency of the directors/officers of the charity who'd have signing authority, and they could link to their branch-based operating account.

You could give them your Tangerine Orange Key and possibly get a referral bonus, too.

Cheers,
Doug

Loonie said
Thanks for both of your responses.
I'm leaning towards Oaken, having just confirmed with them that they do offer same rates to charities as to persons.
I am awaiting some answers to questions I have put to this charity. Although national in scope, it is quite small in budget. Looks like the amount would be just over 100K to invest. (I looked at their 2018 Annual Report online.) They have been getting less than 1% at TD. I think, but am not sure, that it may be in terms less than a year, certainly not more. They have a line of credit secured against it, and may not want to lose tha, but they have not been utilizing it. However, I'm thinking a cashable one year at Oaken might do the trick, and then they wouldn't need the line of credit, effectively bypassing the LOC by using their own money if need be but still keeping good GIC rates - certainly way better than TD's. How does that sound?

True, but these funds might also be part of a restricted endowment pledged to them that only the interest or investment income be withdrawn and used for either of general or specific purposes each year. They may still be able to pledge their endowed funds as collateral for a secured line of credit, but would depend on the donation agreement(s) they have.

Some of the funds could be from government grants or from grants from casino gaming revenues, which have to be spent in a given year. Thus, there are a number of reasons they may need a line of credit for very short term cash flow management needs, it would seem to me.

Based on your experience, do you think TD would accept the GIC from Oaken as collateral for the line of credit? I doubt Oaken offers them although their parent might, but perhaps too complicated for these folks

Home Trust does also offer corporate deposits, but Oaken should be able to add a "restriction" or limit on the GIC that requires a supervisor override to withdraw, thereby prohibiting online redemptions. Thus, they could, quite easily, add a narrative that this GIC is pledged as collateral for a TD secured line of credit and requires written release from TDCT to redeem the principal (or that portion of the principal that is pledged). I, myself, have a $5,000 GIC with a narrative and a restriction that it is securing my $5,000 personal line of credit attached to my Coast Capital Savings chequing account (since I opened it while not working and going to school full-time). Plus, I benefit from Coast's lower Prime+0.50% secured borrowing rates (4.45%). The question is more whether TD Canada Trust will accept the collateral held at a different institution; there could be an annual fee to do so (say $100 or less), and they may, optionally, require a PPSA registration on the collateral identifying where it's held.

They have been thinking of mutual funds, which I think would be a terrible idea and definitely would eliminate the LOC. Far too risky considering their relatively small assets and that they must rely on them. TD 8150 etc would be OK but also might not qualify for the LOC as the rate is variable, more like a savings account, and I don't know if it's possible to put a lien on it.  

Mutual funds aren't a terrible idea, provided they have a proper asset allocation and keep them to low cost, index equity and bond funds (sub 1% management fees, preferably much less than that). Also, actually, mutual funds can be used as collateral. At HSBC, we had one Premier client that used their HSBC Securities investment brokerage accounts (non-registered and/or TFSA) as collateral for their secured line of credit, for which the Branch Manager had to monitor, typically, on a monthly basis, to make sure the market value of the securities in the account hadn't declined to the extent that it was no longer covering that portion of the line of credit under the agreement. In another case, while shadowing the Business Banking Officer, typically, her clients would routinely e-mail her monthly spreadsheets showing their cash flow projections, which she'd then adjust the amount they were allowed to use of their authorized line of credit. Such activities are called margining.

It all depends on how long term these funds are - if they were perpetual endowment funds, I'd definitely recommend a low-cost couch potato ETF portfolio or a single-ticket asset allocation ETF from Vanguard, BlackRock, Horizons, or BMO that charges between 0.16-0.22% MER. If these are funds that would be used entirely within the next 5 years, including the principal, then I'd stick with GICs and HISAs. 🙂

Cheers,
Doug

For any small business owners out there, Meridian CU in Ontario has a special 3 year cashable rate offer. Unfortunately I only found out about it yesterday and it is apparently ending this week. But if you are in the market and you are fast....

Special Offers for Business
2.90% 3-Year GIC, cashable

https://www.meridiancu.ca/Small-Business/Small-Business-Investing/Products-and-Account-Types/3-Year-Cashable-GIC.aspx