When it comes to small business, you’ll mostly run into APY when it comes to your business bank accounts. More specifically, most banks offer interest on only their business savings accounts, so things like money market accounts and certificates of deposit (CDs).
There are a few banks out there that offer interest on business checking accounts, but those are relatively few in number (in fact, thanks to Regulation Q, interest-bearing checking accounts were illegal for businesses up until 2011!1).
We do want to point out that APY won’t exactly make or break your business. A 2% APY on a $1,000 principal will earn you $20 in interest over one year, while a 3% APY rate (unheard of for business accounts) would earn you $30—just a $10 difference. With a $10,000 principal, it becomes a $100 difference ($200 vs. $300).
In other words, you shouldn’t obsess about finding the highest-possible APY when you open a business bank account. Just look for a bank that has a competitive APY and otherwise good reviews. Because while a higher APY rate will score you more interest, it probably won’t earn you as much as you think.
Still, all other things being equal, choose the account with the higher APY.