FDIC Insurance Limits for a Syndication Deal Account
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After a deal closes, its LLC can hold hundreds of thousands of dollars between rent collection and the quarterly distribution. The question sponsors ask is how much of it is insured. This post walks through the FDIC rule, how Mercury and Ramp say they extend coverage and what is not covered at all. Facts come from the FDIC and from each provider's pages, read November 3, 2026.
The basic rule
The FDIC says deposit insurance covers $250,000 per depositor, per FDIC-insured bank, for each account ownership category. Deposits in the same category at the same bank are added together. A deal LLC is a company, which falls in the FDIC's corporation, partnership and unincorporated association category. Its checking and savings accounts at one bank are combined for the limit; the sponsor's personal accounts are a different depositor.
What the FDIC does not cover
The FDIC says insurance does not cover non-deposit investment products, even those sold by insured banks. Its list includes stocks, bonds, mutual funds and U.S. Treasury securities. A money market fund is an investment, not a deposit, so it sits outside deposit insurance. That is why Mercury Treasury and Ramp's investment account carry different protections; read Mercury Treasury and Ramp Treasury.
How sweep networks add coverage
A fintech such as Mercury or Ramp is not a bank. Each works with partner banks. Mercury says it spreads deposits through a sweep network across up to 20 banks, naming Choice Financial Group and Column N.A. as partner banks, for up to $5M of FDIC insurance. Mercury also says pass-through coverage applies only when a sweep network meets specific requirements. Ramp says its deposits sit at First Internet Bank of Indiana and can receive coverage through IntraFi's ICS service, with pass-through coverage depending on titling and recordkeeping conditions.
What this means in practice:
- Coverage applies if an insured bank fails; it does not protect against fraud, a wrong transfer or a lost password.
- The headline number is a provider's statement. Ask the provider for the program banks and a current coverage letter.
- The FDIC offers an Electronic Deposit Insurance Estimator at edie.fdic.gov to check a specific setup.
A simple routine for a deal account
- List every account the LLC holds, at every bank.
- Add up each bank's balance and compare it with $250,000, or with the sweep program's stated limit.
- Decide how much cash needs to sit in the account between rent and the quarterly payment, and whether the rest belongs in a different account.
- Recheck after closing, after a sale and after any large reserve movement.
Investor money is separate
Investors wire purchase money into escrow at Enterprise Bank & Trust, an FDIC-insured bank, and it moves only on closing day. It is not the same money as the deal account described here. See escrow in a syndication and whether a syndication investment is insured.
Which provider
DoorRaise suggests Ramp when a deal keeps $25,000 or more and Mercury under that; the sponsor chooses. Open a Mercury account or apply for Ramp. DoorRaise may earn a referral reward if you sign up through these links: for Mercury, the deal company gets $250 and DoorRaise gets $250 once the account receives $10,000 within 90 days, and Ramp may pay a referral reward. A new deal LLC cannot open Ramp before closing (Ramp needs at least $25,000 in cash), so it opens Mercury first to receive the closing funds and can move to Ramp after closing.
How DoorRaise fits in
DoorRaise helps sponsors raise equity for apartment buildings from their friends and followers under Rule 506(b) or 506(c), and verifies that every investor is accredited. Investors' purchase money goes into escrow at Enterprise Bank & Trust by wire only, and wire instructions appear once escrow is open. The deal's operating account at Mercury or Ramp is a separate account that you open for the LLC and use after closing. Fees: $1,500 to set up (non-refundable), then $5,000 a year from closing (only if the deal closes). See pricing or how it works.
FAQ
Does the FDIC insure an LLC's bank account?
Yes, as a deposit in the corporation, partnership and unincorporated association category, up to $250,000 per bank, per the FDIC. Check your own setup with the FDIC estimator.
Is $5M of coverage at Mercury the same as at a bank?
Mercury says its sweep network spreads deposits across partner banks so each stays within the standard limit. It also says pass-through coverage depends on meeting requirements, so ask Mercury for the details.
Are Treasury funds insured?
No. The FDIC does not insure investment products. Mercury and Ramp say their investment offerings are not FDIC-insured.
Sources
- FDIC: understanding deposit insurance
- FDIC: Electronic Deposit Insurance Estimator
- Mercury: frequently asked questions
- Mercury: are sweep networks safe?
- Ramp: Treasury
This article is general information as of November 2026, not legal, tax, banking or investment advice. Provider details come from each provider's own public pages and official sources, read on November 3, 2026, and change often, so confirm them before you apply. Ask your own lawyer and accountant. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.