What is a sweep network and why it matters

Sweep networks turn $250K of FDIC coverage into $10M. Here's the 30-second version, the trade-offs, and the one question to ask your bank today.

You have $2M sitting in your operating account. Your bank insures the first $250,000. The other $1.75M is on the line if the bank fails.

A sweep network fixes this. In one product. Without you noticing.

The 30-second version

Your bank partners with a network of other FDIC-insured banks. Your deposits get split into $250,000 slices. Each slice sits at a different bank. Each is fully insured.

You see one balance. The network spreads the cash. Result: FDIC coverage extended to $10M per entity (opens in a new tab), sometimes more.

Where the cash actually goes

Most sweep networks (IntraFi Cash Service, ICS, CDARS) work the same way:

1. You deposit money at your primary bank
2. Your bank places the funds into the network
3. The network distributes deposits across other FDIC-member banks in $250K chunks
4. Statements still come from your primary bank

You write one check. The network handles the rest.

Why this exists in the first place

FDIC coverage was set in 1933 at $2,500. It's been raised eleven times since. The current $250,000 limit was set in 2008.

The problem: a typical operating account for a 5-location dental group runs $1M to $3M. The limit hasn't kept up with how businesses actually hold cash.

Sweep networks are the regulatory-blessed workaround. The first one (Promontory's CDARS) launched in 2003. The product has matured into something most banks could offer if they wanted to, yet FDIC insurance and sweep coverage still get conflated (opens in a new tab) more often than not.

What you give up

Real talk. Sweep networks aren't free magic. Trade-offs:

• A small yield haircut (sometimes 5-15 basis points vs. a single high-yield account)
• A list of "destination banks" you can opt out of for relationship reasons
• Slightly slower availability on day-1 deposits (most clear in one business day)

For a practice holding $1M+ in operating cash, the trade is usually worth it.

What you keep

You don't lose visibility, control, or convenience:

• One login at your primary bank
• One statement showing the full balance
• Same wire and ACH limits
• Same fee structure
• Per-entity reports if you're running an MSO-PC structure (opens in a new tab)

The destination banks are invisible to your day-to-day.

What practices actually use this for

A few common cases:

• Operating cash above $250K at a single bank
• Capital reserves earmarked for build-outs or M&A
• Sale proceeds parked between deal close and reinvestment
• Multi-entity DSOs and MSOs with millions in pooled treasury
• Single-PC practices with healthy AR cycles and over $250K in float

If your CFO can't tell you total insured coverage in under 30 seconds, you need this.

Picking a bank that offers it

Most generalist banks don't offer sweep networks. The ones that do bury it under "treasury services" and require minimum balances or extra paperwork.

Healthcare-native banks like Lemma include it as standard. $10M FDIC per entity, no minimums, set up in one click.

The one question to ask today

Email your relationship manager. Ask: "What's my total FDIC-insured coverage right now, broken out by entity?" If the answer takes more than a day or comes back as a guess, you have your answer.

A sweep network turns $250K coverage into $10M with no real downside. If your bank doesn't offer one, you're paying for risk you don't need to carry.