Karat Financial, the company known for its credit cards for creators, is launching a creator-focused business banking product. Powered by digital bank Grasshopper, Karat’s banking product is a natural extension of its credit card offering with Visa.
“Six years in, the problem we’re solving is still the same,” co-founder and co-CEO Eric Wei told TechCrunch. “Creators are real businesses, and banks don’t understand them.”
Despite their prominent position in culture, creators still encounter hiccups when doing simple things like applying for a business credit card or opening up a bank account, even when their businesses are booming.
In some cases, Wei has seen creators who make millions of dollars a year get declined when making $100 purchases at department stores. In more ambitious cases, Wei saw William Osman, a creator with over 3 million YouTube subscribers, fail to get the six figures in credit he needed to put on the Open Sauce convention.
Karat stepped in, gave Osman the credit, and soon got paid back.
“This was a no-brainer, but a normal institution just does not understand the nature of their business,” Wei said.
To date, Karat has extended $1.5 billion in credit, with the average credit limit per creator at $25,000. But creators needed more financial services beyond the Karat Visa.
“As this business-oriented side of the entire creator industry grows, we’re no longer just working with YouTubers who are like, ‘Oh my God, what are taxes?’” Wei said. “We’re also working with entrepreneurs who are like, ‘Why is this so hard for me to get proper treatment from a bank?’”
For business banking, Karat offers two tiers — one is a free, FDIC-insured business checking account with automated tax planning (most creators are independent contractors, so they have to prepare more intentionally for their tax payments than if they had a more traditional full-time job).
The premium offering costs $20 per month or requires a $35,000 minimum balance, but provides 2% to 3% APY on checking accounts, free wires, and enhanced customer support, with AI bookkeeping coming soon.
“We know creators actually keep a lot of money in their checking account because the industry is so unstable, so we pay meaningful APY on checking, which most banks actually don’t do,” Wei said. “We have to balance that with knowledge on the banking side of working with a banking partner and helping them understand, ‘Oh, these are really valuable creators and customers to bring on.’”
In the future, Karat hopes to continue this trajectory of offering more and more business services for creators that traditional institutions are reluctant to provide. A possible avenue could be offering various types of insurance to creators, including healthcare for their companies.
“We’re basically trying to reconstruct the financial safety net for people who make money themselves,” said Wei.
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