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How can an investor use financing and qualify for direct EB-5?

I am looking to invest into an existing gas station that is for sale in a high unemployment area which requires a $500,000 investment. My plan is to build two additional retail spaces on the property. The gas station along with its real estate is for sale at $1,050,000, but I only have $550,000 in liquid cash available. How can I still qualify for the EB-5 visa? Would I be eligible if I put the $500,000 down and finance the remaining amount?

Answers

  • Avatar

    Ed Beshara

    Immigration Attorney
    Answered on

    If the location of the business activity (new commercial enterprise/ job creating entity) is in a Targeted Employment Area, then the personal investment requirement is $500,000. If more funds are needed over and above the $500,000, then these funds can be borrowed against the assets of the U.S. business.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    If the new commercial enterprise (NCE) is principally doing business in a targeted employment area (TEA), then the amount of capital required is $500,000. If you obtain other financing necessary to complete the project, that is fine. You just need to document that all of your EB-5 funds are lawfully obtained and are being used by the NCE to create 10 additional new full-time positions. Any financing you use that will be counted as part of your EB-5 investment capital cannot be secured by assets of the NCE. You should talk to an experienced EB-5 immigration attorney to make sure everything is structured correctly from the beginning of the project.

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    John J Downey

    Immigration Attorney
    Answered on

    If memory serves me, the cost of real estate is not counted as part of your investment. You can finance as long as you are personally liable and you are not using the investment as collateral. You should definitely contact an experienced EB-5 attorney before you proceed.

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    Sara Wang

    Immigration Attorney
    Answered on

    You can qualify for an EB-5 visa if you can trace the source of your $550,000 in liquid cash in detail (i.e. how did you earn/come about this $550,000?). You can also finance the rest, however, as stated by the Immigrant Investor Program Office, "proceeds from a loan may qualify as capital used for EB-5 investments, provided that the requirements placed upon indebtedness by 8 C.F.R. - 204.6(e) are satisfied. Under 8 C.F.R. - 204.6(e), '[c]apital means "cash, equipment, inventory, other tangible property, cash equivalents,and indebtedness secured by assets owned by the alien entrepreneur, provided that the alien entrepreneur is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness.'" Furthermore, you must also demonstrate that the collateral used to secure the loan is of value and you must be able to trace the source of fund used to purchase/obtain such collateral.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    If the project is indeed in a TEA, all you need to do is invest the $500,000, which all needs to be from lawful sources (and for which we need to provide USCIS with evidence proving as such).

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    Robert Lee

    Immigration Attorney
    Answered on

    Please note, as an existing gas station you will have to create 10 new full-time jobs on top of the ones already in existence. With that being said, as long as you have $500,000 for the investment and can have it sourced by legal means, you can combine it with any other financing needed for the project. As a matter of fact, you should use the fact that you will be using EB-5 funds to leverage it for a better interest rate.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    Financing is fine, but you need to secure with assets other than the project itself. Perhaps the gas station and retail development can be set up as separate legal entities, and then you can just borrow for one and be able to secure them with the assets in that entity.

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    Sufen Hilf

    Immigration Attorney
    Answered on

    Yes. However, if you finance the rest, you can not use your business as security to guaranty the loan.

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    Stephen Berman

    Immigration Attorney
    Answered on

    If it is in a targeted area with high unemployment, $500,000 is a sufficient investment.

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    Ian E Scott

    Immigration Attorney
    Answered on

    For an EB-5 investment, the investment can be from a loan as long as the loan is secured with personal assets. In your example, the loan likely would not have to be secured as the $500,000 cash would represent the investment amount.

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