Karat Financial Extends Business Banking to Empower Creators

Karat Financial, renowned for its innovative credit card solutions tailored for content creators, is expanding its financial services with the launch of a business banking product designed specifically for the creator economy. This new offering, powered by Grasshopper, a digital bank, represents a significant step in addressing the unique financial needs of creators.

“Six years in, the problem we’re solving is still the same,” stated Eric Wei, co-founder and co-CEO of Karat Financial, in an interview with TechCrunch. “Creators are real businesses, and banks don’t understand them.”

Despite their cultural influence and growing economic power, creators often face challenges when accessing essential financial services, such as business credit cards and bank accounts. Traditional financial institutions often fail to recognize the distinct business models and income streams of content creators.

Wei shared instances where creators earning millions annually were declined for relatively small purchases. He highlighted the case of William Osman, a YouTube creator with over 3 million subscribers, who struggled to secure the necessary credit for his Open Sauce convention. Karat Financial stepped in to provide the required credit, demonstrating their understanding of the creator economy.

To date, Karat Financial has extended $1.5 billion in credit to creators, with an average credit limit of $25,000 per creator. Recognizing the need for a broader range of financial services, Karat Financial is now offering business banking solutions.

“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 explained. “We’re also working with entrepreneurs who are like, ‘Why is this so hard for me to get proper treatment from a bank?’”

Karat Financial’s business banking services include a free, FDIC-insured business checking account that offers automated tax planning, essential for independent contractors. A premium tier, priced at $20 per month or requiring a $35,000 minimum balance, provides 2% to 3% APY on checking accounts, complimentary wire transfers, enhanced customer support, and AI-powered bookkeeping features in the near future.

“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 added. “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.’”

Looking ahead, Karat Financial aims to expand its offerings to include various types of insurance for creators, including healthcare solutions for their companies.

“We’re basically trying to reconstruct the financial safety net for people who make money themselves,” Wei concluded.