It is a financial tool through which SMEs can obtain financing at a lower cost than traditional sources of funds.
Financial trusts allow the separation of certain assets from the assets of the company to be transferred by an administrator in fiduciary property, transforming it into liquid financial assets. The trust assets are separated from the commercial risk of the company allowing access to better risk ratings.
The success of this tool lies in the possibility of association between sectoral or regional SMEs in order to lower fixed costs and reduce risk.
Main benefits for the issuing company of a Financial Trust
- It allows to transform illiquid assets into liquid financial assets.
- The transferred assets are exempt from the actions of the company’s creditors.
- The company and its balance sheet are independent of the instrument.
- The credit evaluation is carried out on the assets transferred and not on the company.
- To the extent that they have good projected businesses, companies with financial difficulties can also access financing.