3 Reasons to Use a Corporate Trustee to Lower Business Debt

3 Reasons to Use a Corporate Trustee to Lower Business Debt

Even the most successful businesses aren’t immune to having some level of debt on their books, as it is often a necessary component of expansion. However, these debts can accumulate over time and can cause many problems if the proper plan is not in place.

A common solution used to lower the debt levels of a business is to use a corporate trustee, like a professional trust company or a bank. This is especially true with Chapter 11 bankruptcies or other corporate restructurings. Let’s look at three reasons to use a corporate trustee to lower business debt.

1- Can Get Better Rates and Terms

A high-quality corporate trustee will be able to negotiate better rates and terms for loans and other debts than a standard business would likely be offered by its creditors or lenders. This is important because negotiating rates and terms could make a large difference in the final amount paid on loans or debts.

This is partially made possible by the fact that lenders and other creditors typically give lower rates to professional trust organizations, as there is a higher likelihood that the debt will be repaid compared to a standard organization that might be better served by filing for Chapter 11, which can lower the amount of money the lender receives back.

2- Case-By-Case Negotiations

Another important way that corporate trustees can lower a company’s debt is by negotiating loans or other services on a case-by-case basis. Instead of accepting terms “off the shelf” (which is to say “accepting the standard terms”), they can negotiate with individual companies to achieve the best possible outcome.

A company’s CEO or CFO is also capable of handling these negotiations as part of their skill set but the amount of time it would take generally makes it unfeasible. Instead, it’s best to hand it off to a corporate trustee who has likely already negotiated terms and rates for other companies and likely has a good relationship with the lending company.

3- Years of Experience Restructuring to Lower Debt

This, of course, leads to the most important reason to use a corporate trustee to lower business debt: their experience. A good corporate trustee company will have done similar work for other companies over the years and will have learned through trial and error the best methods to reduce a company’s total debt.

They’ll also understand their fiduciary responsibility to do their best work and get your company the best deal possible. They want to lower your debt by as much as they can to make sure that you’re completely happy with their work and that you’ll continue using them. Your success is their success, which serves as a powerful motivator.

For most businesses, a corporate trustee company is an excellent way to lower their business debt. Through the trustee’s years of operations, they’ll know how to negotiate the best rates, can spend hours negotiating individual deals (which would be both cost and time-prohibitive for company employees), and have a vested interest in doing everything they can to best serve your company’s needs.