Financial trusts are a very important part of the many opportunities offered by trust contracts. It is a financial tool for companies to separate some of their assets from their patrimony, and thus have the possibility to make them grow, together with a trustee for their administration.
The success of the financial trust lies in the fact that a group of SMEs can come together and partner to reduce the risk and costs of the operation. And it is used to transform illiquid assets into liquid assets.
In this type of trust, as in any other, all assets contributed to the agreement are exempt from the action of any creditor. Thus, any company with a good business perspective could have access to a financial trust, even if it has economic difficulties.
Benefits of the financial trust:
- It makes it possible to transform non-liquid assets into liquid assets.
- All assets contributed to the trust are free from any action by the company’s creditors.
- It achieves the decoupling between the company and its trust balance sheet.
- It allows companies, especially SMEs, to access better financing options, even if they are experiencing financial difficulties.
In conclusion, the financial trust is one of the best financial tools that helps small companies to seek better sources of financing, reduce costs and consequently reduce risks.