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.
Depends on the regional center making the offering.
Loans in the strict sense of the word are not allowed. This is because the regulations classify loans or any form of debt, money "not at-risk". In order to qualify as an EB-5 investment the moneys have to be "at-risk". This is achieved by having a preferred stock or common stock, i.e. equity position either directly in an enterprise or most often, in a regional center framework, in an NCE. The NCE, otherwise known as the newly created entity, typically makes a loan to another entity called the JCE, otherwise known as job creating entity. This subtle difference is very important. While third parties cannot guarantee the EB-5 investment directly, they can guarantee the NCE loan to the JCE because that guarantee does not upset the money at-risk feature of the EB-5 investor exposure to the NCE.
Subscribe for News
This website is for informational purposes only and does not constitute an offer or solicitation to sell shares or securities. Any such offer or solicitation will be made only by means of an investment's confidential Offering Memorandum and in accordance with the terms of all applicable securities and other laws. This website does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or any invitation to offer to buy or subscribe for, any securities, nor should it or any part of it form the basis of, or be relied on in any connection with, any contract or commitment whatsoever. EB5Projects.com LLC and its affiliates expressly disclaim any and all responsibility for any direct or consequential loss or damage of any kind whatsoever arising directly or indirectly from: (i) reliance on any information contained in the website, (ii) any error, omission or inaccuracy in any such information or (iii) any action resulting therefrom.