How are public-private EB-5 projects different?
Does the EB-5 investment need to be made in a business or can it be made in projects that the city/state is undertaking? Are there any advantages to investing in a public-private EB-5 project? How are public-private EB-5 projects different from private EB-5 projects?
The investment can be made into public private partnerships. These partnerships market well because of the element of government involvement, which tends to give investors confidence, both that the project will get completed (and create the necessary jobs, and rightly or wrongly, and that the project will not run out of money.
It depends on whether the government gets involved. However, the public project does not necessarily reduce the risk of the project.
In public-private projects there is involvement of a governmental entity. Therefore, there seems to be an impression out there that public-private projects are safer. This is not necessarily the case. What makes an EB-5 project desirable depends on many factors such as a) the ratio of equity to total capital stack needed for the project, that is the total spend; b) the waterfall, that is when EB-5 investors could be paid; c) the existence or not of covenants that limit / restrict additional indebtedness; d) the stage the project is - this would either increase or decrease the chance of reinvestment of the EB-5 funds. There are a whole host of other factors that need to be considered.
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