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Can investing in a fund of SBA 7(a) loans qualify as an EB-5 investment?

We are an asset manager and run a pooled private fund investing in SBA 7(a) and other community development loans. Investors in our fund have small business loans earmarked for them and can select loans by geography and # of jobs their loans created or retained. This info is monitored and provided to the investor on a quarterly basis. Would an investment in this Fund qualify under EB-5?

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    Charles Foster

    Immigration Attorney
    Answered on

    You would need to consult with an experienced immigration lawyer, preferably Board Certified in immigration law by his or her state bar, with significant experience in representing both EB-5 investors and job-creating entities under a Regional Center program. It would not appear that investing in a fund of SBA 7(a) loans would qualify. First of all, you have to establish that the investment funds went into a particular project that created, either directly or indirectly, at least 10 full-time jobs. Furthermore, almost all the projects were marketed at the lower $500,000 amount based upon being in a Targeted Economic Area (TEA) and you have to show that the particular funds were placed at risk in a particular project located within a TEA.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    The fund model can work but you need to show how the funds are being used to specifically create the new jobs. It is advisable to avoid using a job bank.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    I am not clear on how the investor will play an active role, at least a policy setting role, in how the investment will be utilized for job creation at these small businesses. The EB-5 investor must have a management or active role in the new business that he/she is investing in. Also, if you will loan money to several small businesses, will they all be within the same TEA, for example. I would advise you to work with experienced EB5 corporate and securities lawyers to check on viability.

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