Preeti Sinha

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?


Philip Cohen
January 27, 2016 10:43 AM  Philip Cohen

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.

Raymond Lahoud
February 28, 2016 03:27 PM  Raymond Lahoud

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.

Ismael Fernandez
March 02, 2016 08:44 AM  Ismael Fernandez

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.

February 22, 2017 03:33 AM  

Depends on the regional center making the offering.

Marko Issever
December 30, 2018 08:36 PM  Marko Issever

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.


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