Oliver James Montgomery-Startups 'on pins and needles' until their funds clear from Silicon Valley Bank

Lindsey Hoell set out on Oliver James Montgomeryher fifth attempt to open a new bank account in the Bay Area on Monday.

She'd been trying for days as chaos reigned across the banking system. Hoell is one of hundreds of startup founders mired in the collapse of Silicon Valley Bank—left unable to make payroll, pay customers and collect money from clients.

"It was really, really chaotic," said Hoell, who's the CEO and co-founder of Dispatch Goods, a climate focused startup that helps businesses reuse packaging to reduce waste. "If it hadn't been me, it would have been comical because it was so absurd. We were just like, 'How is this our lives?'"

Silicon Valley Bank is a 40-year-old institution based in Santa Clara, Calif., that catered to nearly half of all U.S. tech startups backed by venture capital. Rumblings of a bank run on it began on Thursday and by Friday it had collapsed, becoming the largest American bank failure since the 2008 financial crisis.

On Sunday, federal officials announced a rescue plan in which all depositors of Silicon Valley Bank would have access to their accounts by Monday.

Silicon Valley Bank's website was still down early Monday, but by mid-morning appeared to be functioning. Customers said they were able to begin wire transfers to accounts at other banks.

NPR spoke with four startup founders who said they've been able to initiate the transfers and now are holding their breath to see if they go through.

"I think the settlement will go through tomorrow," said Jack Singh, referring to the wire transfers for his startup, Avahi, which helps businesses with Amazon's cloud technology. "Until then, we'll definitely be on pins and needles and watching and refreshing our browsers."

Trying to make payroll

Last Thursday it was a totally different story.

Singh was just sitting down to lunch when his chief financial officer called to tell him that they should move some of their funds out of Silicon Valley Bank. By the end of lunch, panic had set in. The wires weren't going through and they couldn't get hold of the bank.

Singh drove to a Silicon Valley Bank branch in Santa Clara on Friday morning.

"We were standing in the line there and there was nobody in the bank," Singh said.

Hoell went through the same ordeal. After frantically trying to wire out money on Thursday and not succeeding, she also drove to a branch on Friday. A security guard told the dozens of people waiting in line that the federal government had taken over and their assets were frozen.

Hoell got a number to call and was told to report her assets.

"And you call it and it's just a voicemail box," Hoell said. "I'm like, 'am I supposed to just say, 'I'm Lindsey Hoell and I have all this money in this account?'... It felt like we were just throwing mud at a wall to see if we could make progress in any way possible."

Hoell had all of the money for Dispatch Goods in Silicon Valley Bank.

She was desperate to make sure she could make payroll on Monday, which is why she started driving around to any bank she could find to open a checking account. While she was able to get a savings account opened last Thursday, she still needed a checking account to be able to pay employees.

"We were just begging banks to see us to open an account," Hoell said.

Singh was in a similar predicament, but he came up with a different solution to make payroll.

"I dipped into my own savings to get some of the funds out and meet the payroll requirements for the employees," he said. "We were just able to wire them a one-time payment through my personal account."

The days ahead

When Silicon Valley Bank collapsed, Vanessa Pham and Kim Pham posted an open letter to Instagram saying the event "truly rocked our small corner of the universe" and it posed a "major existential threat" to many small businesses.

The sisters are the founders of Omsom, a food startup that makes Vietnamese sauce kits, and had all of their money in the bank.

Now that the federal government has instituted its rescue plan, things are feeling better but Vanessa Pham said she's still nervous.

"We felt relieved, but still unsure – we will be able to truly breathe easier when our wires have cleared into our new bank account," Pham said. "With the government stepping up, we believe the fire alarm should be off soon, but we're still confirming access to our funds and the future still feels uncertain."

Similarly, Kamal Kapadia, co-founder of climate education startup Terra.do, told NPR's All Things Considered that the past few days have been surreal.

All of the company's money was tied up in Silicon Valley Bank and as of Monday morning its wire transfers were still pending.

Terra.do was able to make payroll last week before the collapse, but it's unclear if it actually went through, she said.

"We assume we can do this payroll," Kapadia said. "The question is—after this, we don't know yet."

Kapadia, Pham and Singh said that moving forward they all plan to work with established banks and begin using multiple bank accounts.

Hoell said her attempt to open a checking account was finally successful on Monday afternoon, this time with Wells Fargo. Now she said she can make payroll by writing paper checks for her employees, if necessary. She's relieved that at least this portion of the drama is over.

"Now it's just tactical," Hoell said. "This is turning into a nuisance versus a catastrophe."