I am confused as to whether an EB-5 project raises money as a loan from investors or in the form of equity participation. Can you please clarify?
Both forms of investment are possible. The technical requirement under the program is that the investor makes an equity investment into a New Commercial Enterprise. However, what is commonly done under the program to turn this into a loan is to create a New Commercial Enterprise whose sole purpose is to take in EB-5 investor capital and then turns around and lends this money to the Job Creating Enterprise (i.e. the actual project entity).
Speak to your advisors and legal team to better understand how to execute this particular loan structure.
It is possible to structure either a loan pool or an equity participation pool. The EB-5 loan pool could serve as the lender in the job creation.
EB-5 is an immigration investment program, so as long as you create ten jobs per investor, the amount is above the minimums ($500,000/$1,000,0000), and the investment is taking place in a New Commercial Enterprise - defined as one that was formed after 1990 - then you can treat your investors as you would with any other domestic investor and treat the money as a loan, convertible loan, or directly equity.
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