Sarah Puil's startup wine business called BOXT survived the pandemic the year it launched. But that didn't prevent her deep concern about the company's ability to expand when she heard about the failure of Silicon Valley Bank, the institution that held a lot of BOXT's funds and loans.

The Federal Deposit Insurance Corp., or FDIC took over on March 12 as receiver of Silicon Valley Bank after California regulators shut it down. While the FDIC created Deposit Insurance National Bank of Santa Clara and transferred to that financial institution all insured deposits of Silicon Valley Bank, BOXT moved most funds to a major bank she doesn't want to name because she said the service isn't nearly as good.

Puil's situation provides a glimpse into the way the collapse has rippled through small businesses by taking out a funding source that specialized in dealing with startups seeking to grow and potentially lease property.

BOXT needs to raise private capital, and Silicon Valley Bank’s failure made an already difficult fundraising process even harder, according to Puil. The Austin, Texas-based company that sells wine in a box directly to consumers now uses two facilities, one in California's Napa Valley and the other in Meadow, Texas, and it wants to keep expanding but needs guidance as well as loans.

“We have diversified our banking, and the difference is that we are a number, not a name or a relationship," said Puil, 44. "We are way too small to care about and sadly, they aren’t a resource for us when it comes to understanding what we should be doing from a banking and finance perspective like SVB was."

Silicon Valley Bank, Puil said, was an important partner to entrepreneurs in the United States because it provided debt and credit facilities, including a line of credit BOXT could draw from when needed, that traditional banks would not.

"In particular, their venture debt product allowed entrepreneurs to take out additional debt on top of the venture capital they raised," she said.

She said this created stronger ties between the bank and the company.

"The debt gave us important access to capital to build the business. In this way, the bank would win if we won, and would lose if the startup didn’t make it. So a sense of being in it together — they were truly business partners with us. They knew us well, they knew our business, and they understood the risks."

Puil said her company will be OK because the federal government secured money BOXT had in Silicon Valley Bank.

“Access to capital, our core cash, is currently secure," Puil said. “As an entrepreneur, and a first-time one at that, I didn’t really understand the intensity of the experience of starting a company."

She added the experience taught her that, "almost like everything else, you don’t realize how big it is until you are way in the middle of it."