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Which banks have flexible early release terms when the offering contains non-escrow investor protections for possible I-526 denial?

Our project involves a two-stage, well-defined early release from escrow, with all early released funds guaranteed by a highly credit-worthy affiliate of the project. We have been told that some EB-5 escrow agents/service providers may be unwilling to waive their underwriting criteria around early release, even if we satisfy the underlying risk through the guarantee. What escrow companies or banks do you have experience with that are flexible with early release when the offering contains non-escrow investor protections for the possibility of I-526 denial?

Answers

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    Steffanie J Lewis

    Immigration Attorney
    Answered on

    Usually, EB-5 investment funds will be held in an escrow account until the I-526 petition gets approved, at which time funds will be released to the project. Depending upon the terms of the escrow agreement, and generally, if an I-526 petition were denied, banks would be liable to return the investor''s funds if denial were no fault of the investor. Some escrow agreements terminate after the first 5 or 10 Form I-526 petitions are approved. Thereafter all invested funds go directly to the EB5 program enterprise. Some EB-5 programs direct funds directly to the enterprise and entail no escrow account. Upon filing the I-526 petition, the investor attests to having invested in the enterprise and the funds are at risk. Therefore, if the funds have been released to the enterprise under one of the above scenarios, there is no refund of the invested funds. Banks do not control when funds are released to the enterprise. The negotiated escrow agreement, if any, controls release of funds.

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    Lei Jiang

    Immigration Attorney
    Answered on

    NES Financial is in this area. There are other banks who might be willing to do it.

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    Ed Beshara

    Immigration Attorney
    Answered on

    The first step is to negotiate with the bank until your goals have been met. There are alternative approaches that satisfy the bank''s request for the release of funds either at the time the 1-526 petition is filed or, in the alternative, until the I-526 is approved.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    There are a few banks and escrow service providers with experience with EB-5. Finding the best bank and escrow service provider will depend on your specific needs.

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    John J Downey

    Immigration Attorney
    Answered on

    I know one company that has been dealing with EB-5 escrow is NES Financial. You might start there.

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    Daniel B Lundy

    Immigration Attorney
    Answered on

    There are two issues here. One is liability. The bank wants to know there is money to repay the investors, and it is not going to get sued. Banks vary on whether they will allow release upon the filing of the I-526 petition, the approval of one or more I-526 petitions related to a project, or will only release an investor''s funds upon the approval of that investor''s I-526 petition. The other issue is revenue. The banks profit from being able to use the escrowed funds as part of their overall deposits while the funds are in escrow. If they do not get to hold onto the funds for long enough, they don''t make a profit and will charge higher fees. I believe U.S. Bank is still allow some forms of early release. I cannot think of any others off hand. We work with NES Financial as an escrow administrator on many deals. They work with some banks that also allow some forms of early release.

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