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What is the maximum percentage of EB-5 funds that can be raised?

I am looking to get some funding for my project through EB-5. The project will need an estimated $50 million. What is the maximum percentage of funds I am allowed to raise through EB-5? Where can the remaining funds in an EB-5 project originate from?

Answers

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    Ed Beshara

    Immigration Attorney
    Answered on

    Each project will have a certain capital stack equaling the cost of the project. The ratio between the EB-5 raise and the non-EB-5 funding will depend on a number of factors. If it is a regional center project, then the amount of EB-5 funding that can be raised will depend on the number of jobs that can be created indirectly through accepted economic methodologies. From a marketing standpoint it is better to have more funds coming from the non-EB-5 sources than the EB-5 source.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    There is no maximum percentage. There are some large projects that are 100 percent EB-5 funded.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    There is no regulation that defines a minimum or maximum percentage of EB-5 funds that can be used, but the market usually dictates that projects should be funded with a mixture of EB-5 and non-EB-5 funds.

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    John J Downey

    Immigration Attorney
    Answered on

    There is no maximum; however in my experience investors want other money beside theirs in the project. They want the project developer to have some "skin in the game" it gives them a feeling of security. Other sources are bank and/or construction loans.

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    Ying Lu

    Immigration Attorney
    Answered on

    There is no cap on the percentage of EB-5 funds that a project can have. The remaining funds can be from the project developer, bank or any legitimate source.

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    Nelson Lee

    Immigration Attorney
    Answered on

    Technically, 100% of your project could be funded by EB-5 investors. There is no per se rule on the percentage of funds you are allowed to raise through EB-5. Rather, you need to first determine how many jobs will be created by your project. Remember, the EB-5 Program requires that each investor's investment must lead to the creation of at least 10 full time jobs. If you have a regional center project, both indirect and indirect/induced jobs may be counted. I highly recommend you commission an economist with EB-5 experience to complete a job creation report for your proposed project. Once you have a firm idea of the number of jobs that will be created, you can then go about planning how many EB-5 investors you will need to fund your project. Creating a buffer of more jobs than are actually required by the program has the benefit of added security to investors, which in turn means added security for the project in terms of its ability gain EB-5 investor interest. Having a buffer of jobs means that if things don't go as planned, investors will not lose the opportunity to have the conditions removed from their green cards at the I-829 stage. Where indirect jobs are involved, the job creation numbers will be dependent on fulfilling the inputs that your economist used to develop the indirect job creation calculation. How much of a buffer should you have? A good rule to follow is to plan to create at least 20% more jobs than needed - or 12 jobs per investor. In addition to reviewing a project's ability to meet the job creation requirement, many investors also look to a project's financing. Many prefer that a project not be 100% dependent on EB-5 investment funds. These investors worry that with the so many projects competing for investors, a 100% EB-5 funded project may have difficulty raising the necessary funds to complete the indented development. Some prefer that there be a some sort of bank loan in place since it signifies to them that a major financial institution has already done the due diligence on the project, while others look to see if a developer has enough confidence in the project to put some of his/her own money into it. So, for job creation security and marketing purposes, it may be wise to have a project only 60-80% dependent on EB-5 investor funds.

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    Michael G Homeier

    Securities Attorney
    Answered on

    As securities lawyers, to get a handle on this ourselves, we rely on feedback from our client project principals and regional center principals of the over 180 EB-5 projects we have been privileged to work on over the past 6 years, to report what the overseas agents are willing to sell to their countrymen and women. Concurrently, we also rely on similar input from the prominent immigration lawyers we work with on our offering projects. The consensus answer is that roughly 50-60% (perhaps sometimes up to two-thirds) of a project's total cost can be financed through EB-5. That means the EB-5 investors are looking to see the balance of the 40-50% of the total budget being financed from ideally two additional sources: the developer/project principals themselves (so they have "skin in the game" on their own project), plus other "third-party" equity and/or debt sources, showing that someone other than EB-5 investors and project principals are willing to put substantial money into the project. Alas, the days of 100% EB-5 financing, even for "grand-daddy" regional centers who've always done things that way previously, seem long-gone. Actually, that's probably a very good thing, in truth: from a business (and business law) perspective, speaking generally a project with financing from multiple sources is likely to be more stable, and ultimately more successful. Today's EB-5 marketplace certainly seems to agree.

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    Ian E Scott

    Immigration Attorney
    Answered on

    You can raise 100% of the funds through EB-5 capital as long as you create the required number of jobs.

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