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How can EB-5 funds be lent from one project to another as a mortgage?

I am a lender who is giving a loan to an LLC. The use of funds is to pay back a loan my client borrowed from another EB-5 project they had. They recorded the mortgage and filed tax returns for all the EB-5 investors. Are there any problems with such a transaction?

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    A Olusanjo Omoniyi

    Immigration Attorney
    Answered on

    Yes, it is acceptable within the banking laws. However, unless carefully structured, the funding of the initial project may be adversely affected going forward. The emerging result may create a problem, as it appears there are co-mingling of funds, as this is associated with lending. Consult financial experts for further analysis and guidance, because an EB-5 investment entity is not supposed to be operated as an investment bank.

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    Charles Foster

    Immigration Attorney
    Answered on

    As a lender and not the EB-5 petitioner, I would not think you would have any immigration issues with the transaction as I understand it, nor is it clear whether your client is the EB-5 petitioner, so more information would be required to fully answer all aspects of your question. But I would advise you to see an attorney, preferably one that is board certified in immigration law with significant experience in structuring EB-5 projects.

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