How can EB-5 funds be used to pay off a traditional lender? - EB5Investors.com

How can EB-5 funds be used to pay off a traditional lender?

I have purchased an existing building with an SBA loan. The loan is currently not in default, but we have entered into an agreement to refinance the lender out of the deal. The total project will be $6.5 million of which we have $1.5 million already invested. We are planning to build an entertainment complex and would like to use EB-5 funds to take out the lender and complete the construction. Can we use EB-5 funds for this and if so how much?

Answers

Steffanie J Lewis

Steffanie J Lewis

Immigration Attorneys
Answered on

There is no law regulating how the project should use the EB-5 funds, so long as funds are placed "at risk." The EB-5 funds can be used to pay back the original loan.

A Olusanjo Omoniyi

A Olusanjo Omoniyi

Immigration Attorneys
Answered on

This is not unusual, and you can certainly use the EB-5 funds to refinance the lender out of the deal. Usually, there is no limit on how much EB-5 funds can be used as it all depends on your business needs. Your plan is a common practice in business financing known under various names such as bridge loans or interim financing or gap financing. By all account, it will be a short-term loan (usually of up to a year) that is used until the company secures permanent financing. Last but not the least, if you raise funds through the EB-5 program ensure the EB-5 funds are from lawful sources.

Ed Beshara

Ed Beshara

Immigration Attorneys
Answered on

If the non EB-5 funds from traditional financial sources have been used in the project and it is contemplated that EB-5 funds will be subsequently used to pay off the debt, the EB-5 funds will be used to pay off the bridge loan.

Salvatore Picataggio

Salvatore Picataggio

Immigration Attorneys
Answered on

You seem to be describing bridge financing. EB-5 funds can be used to repay other earlier expenditures. The particulars of this must be reviewed carefully and disclosed properly.

Fredrick W Voigtmann

Fredrick W Voigtmann

Immigration Attorneys
Answered on

Under certain circumstances, EB-5 capital can be used as you have described. It would be best for you to consult with an experienced EB-5 immigration attorney, such as myself who can guide you through this process so that the use of the EB-5 capital will be considered qualifying for EB-5 purposes.

DISCLAIMER: the information found on this website is intended to be general information; it is not legal or financial advice. Specific legal or financial advice can only be given by a licensed professional with full knowledge of all the facts and circumstances of your particular situation. You should seek consultation with legal, immigration, and financial experts prior to participating in the EB-5 program. Posting a question on this website does not create an attorney-client relationship. All questions you post will be available to the public: do not include confidential information in your question.