I know that an EB-5 investment cannot be guaranteed a return by the borrower, but can an investment guaranteed by third party assurance count toward EB-5? How would this affect the “at risk” requirement?
For example, is this considered a guarantee or not; “ABC Inc, the parent company of EFG Inc, shall provide a corporate guarantee of the full loan amount to the limited partnership.”
Investors cannot be guaranteed a return on the investment. The investment must be at risk. The scenario you have provided may violate the at risk provision, due to the parent company''s offer of a guarantee.
There must be business risk. However, your example where one corporation guarantees the debt of another certainly has risk unless the guarantee is collaterialized.
USCIS confirmed that a third party guarantee of the loan to the limited partnership is okay. As long as the return of the investment to each investors is not promised, it will be adequate. This does not constitute a legal consultation and please kindly give me a call or email to discuss further.
In an EB-5 project, the borrower cannot guarantee a return of the principal or any part of it. The entire principal amount of the investment has to be at risk and there can be no insurance policy guaranteeing the return of the principal amount of the investment.
Loans can be guaranteed, but the investors themselves cannot be guaranteed a return of the principal investment amount.
There have been stories of third party guarantees, such as independent insurance policies and such. There was even an answer from a USCIS stakeholder engagement a couple of years ago that a third-party insurance policy would not violate the 'at risk' requirement. This answer is not binding on USCIS, however, and any such insurance policy would be reviewed on a case by case basis. I would advise against such arrangements. Also, the scenario you outlined, i.e., the parent company of the new commercial enterprise offering a guarantee, would likely violate USICS regulations and prevent approval of the I-526 petition.
USCIS is very strict about the "at risk" requirement. So any structure which may "guarantee" your investment should be a red flag to them.
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