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How can EB-5 funds be used to pay off a traditional lender?

I have purchased an existing building with an SBA loan. The loan is currently not in default, but we have entered into an agreement to refinance the lender out of the deal. The total project will be $6.5 million of which we have $1.5 million already invested. We are planning to build an entertainment complex and would like to use EB-5 funds to take out the lender and complete the construction. Can we use EB-5 funds for this and if so how much?

Answers

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    Steffanie J Lewis

    Immigration Attorney
    Answered on

    There is no law regulating how the project should use the EB-5 funds, so long as funds are placed "at risk." The EB-5 funds can be used to pay back the original loan.

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    A Olusanjo Omoniyi

    Immigration Attorney
    Answered on

    This is not unusual, and you can certainly use the EB-5 funds to refinance the lender out of the deal. Usually, there is no limit on how much EB-5 funds can be used as it all depends on your business needs. Your plan is a common practice in business financing known under various names such as bridge loans or interim financing or gap financing. By all account, it will be a short-term loan (usually of up to a year) that is used until the company secures permanent financing. Last but not the least, if you raise funds through the EB-5 program ensure the EB-5 funds are from lawful sources.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    You seem to be describing bridge financing. EB-5 funds can be used to repay other earlier expenditures. The particulars of this must be reviewed carefully and disclosed properly.

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    Ed Beshara

    Immigration Attorney
    Answered on

    If the non EB-5 funds from traditional financial sources have been used in the project and it is contemplated that EB-5 funds will be subsequently used to pay off the debt, the EB-5 funds will be used to pay off the bridge loan.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    Under certain circumstances, EB-5 capital can be used as you have described. It would be best for you to consult with an experienced EB-5 immigration attorney, such as myself who can guide you through this process so that the use of the EB-5 capital will be considered qualifying for EB-5 purposes.

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