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Trust

A Trust is a legal structure where a trustee manages assets or runs a business on behalf of beneficiaries. In lending, banks and non-bank lenders review the trust deed, trustee entity (individual or corporate), financial statements, revenue, and may require personal guarantees from directors or beneficiaries. Trusts frequently apply for Business Loans, Working Capital Loans, and Low Doc Asset Finance.

Why Trusts Matter in Lending

Trust structures add complexity because control, ownership, and distributions differ from sole traders and companies. Lenders review the trust deed to confirm:

  • Who controls the trust (trustee)
  • Which beneficiaries receive income
  • Authority to borrow and grant security
  • Whether a corporate trustee is used
  • If personal guarantees are required

Trusts with strong cashflow often use invoice finance and business lines of credit to stabilise working capital.

Common Types of Trusts

  • Discretionary (Family) Trust — trustee chooses distributions
  • Unit Trust — beneficiaries hold fixed units
  • Hybrid Trust — mix of discretionary and fixed features
  • Bare Trust — trustee holds assets with no discretion
  • Corporate Trustee Structure — often used for asset protection

Official reference: business.gov.au

Do trusts need an ABN?
Yes — trading trusts generally hold an ABN and often a TFN for tax purposes.
Can a trust apply for a business loan?
Yes — lenders require the trust deed and may require a personal guarantee from directors or trustees.
Who is liable for trust debt?
The trustee is legally responsible, and lenders often require additional guarantees.
Do trusts pay tax?
Generally, income is distributed to beneficiaries who then pay tax individually.
Is a corporate trustee better?
Often yes — it provides better asset protection and clearer borrowing authority.