Criteria for project selection
What are the core criteria in choosing the right project for investment?
The project has to be able to generate the required number of jobs so that the applicant can get his/her permanent residency in the United States. In order to ensure that the invested funds will be returned, one should also be careful in choosing a sound project. Some of the obvious criteria are making sure that developer as well as the regional center behind the project have a clean record. Do they have any I-526 approvals; do they have any I-829 approvals; have they returned principal back in previous projects. These are experience related checkpoints. When it comes to the project, we always prefer projects where all the financing is already in place. This way if some or most of the EB5 funds do not come in, the project is still set to be completed. We also pay tremendous attention to the waterfall. We want to make sure that there is a senior loan. Even though the senior loan is ahead of the EB5, it gives us comfort that an institutional money manager, bank etc., has looked at the project and decided to fund it. If the project is good enough for the bank at say, 60% LTV (loan to value) ratio, we reckon that it should be good for our investors at say, 75% LTV. If on the other hand, no institutional money is touching the deal, even if the developer claims the EB5 is ahead of everyone else in the waterfall, it is a red flag for us. In some very rare cases, we do seriously consider projects whereby the developer with outside assets guarantees the NCE loan to the JCE that would give indirect comfort of repayment of principal to the EB5 investors.
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