The lifeline of a business is its cash flow, and small-business owners want to make the most of their cash. They don't want to see money sitting idle. A sweep account combines a checking account with an investment account. The business owner is required to maintain a certain threshold balance in the checking account. When the account drops below the minimum balance, money is automatically swept into the checking account to cover checks and other debits.
Some banks also offer a zero-balance sweep account.
Meanwhile, your excess cash is earning interest. At some of the larger banks, the excess cash can be invested in money market mutual funds, which come with a variety of rates of return and levels of risk. Banks also offer a repo sweep account where the cash is swept overnight into repurchase agreements backed by government and mortgage securities, which are 100 percent collateralized. The sweep account enables a small business without large cash surpluses to make the most of every dollar. But it is not the account for a business with a high number of transactions each month.