[antiviral]

These 'startups' include small businesses like wineries and restaurants. They're not in finance and are not going to want to spend time becoming experts in banking due diligence.

If we insist that they take on their bank's solvency risk as depositors, the rational decision for most of them will simply to be move to a systemically important bank that the govt will likely never let fail (Citi, BofA..). There's no reason for them to keep their business at a small bank and take on risk they don't need to. Regional banks would then wither, and the banking industry would become even more concentrated with a few too-big-to-fail banks becoming even more powerful. It would be a bad outcome for everyone.

BTW, for anyone wondering which banks are considered to be 'systemically important', here's a convenient link to the list:

https://www.fsb.org/wp-content/uploads/P211122.pdf

And here's a link to the group that decided who goes on that list:

https://www.fsb.org/

[riffraff]

Do SV restaurants have millions in cash? Cause up to 250k they were guaranteed.

Those people I know who run restaurants basically have zero cash at hand and are constantly repaying some debts.