To ensure successful I-829 filing, EB-5 issuers should establish procedures to track the flow of an EB-5 investor’s funds throughout the entire EB-5 lifecycle – not just through the escrow account.
When an investor begins the EB-5 process, their funds are typically wired into a subscription escrow account, where they are then held until release conditions are met.
After funds leave escrow they move to the operating account of the New Commercial Enterprise, or NCE. During this process it is essential to track each investors’ funds individually to provide appropriate documentation that the full amount of the investment was “irrevocably committed” to the investment into the NCE.
If the project is structured as an equity investment, the funds may be deployed directly from the NCE into job creating expenses and tracked throughout deployment.
Once funds reach the NCE, it is common to track expenditures at a fund or project level. However, each investor must still demonstrate the creation of 10 jobs at I-829 filing.
In the majority of projects, a loan model is used, and funds are instead deployed from the NCE to the Job Creating Entity, or JCE, as a loan.
Once the loan has been made, the project must document use of those funds to substantiate that job creation targets have been met. Invoices, receipts, paystubs, or other records demonstrating that the funds were spent in accordance with the project’s business plan are essential to validating I-829 job creation.
Over the course of the loan, issuers must also carefully track the interest payments made to ensure no portion of the investment principle is repaid prior to I-829 approval.
- New York
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