How long does a new business have to receive EB-5 funds?

There is no such thing as a grace period rule governing EB-5 financing and investment. Generally, it is better to have a good business plan to avoid any error and consult an EB-5 attorney on this issue.

The structure and timelines for an EB-5 project should be reviewed by qualified EB-5 counsel. Generally, funds are committed before or at the time I-526 petitions for investors are filed, but the timelines can vary depending on your needs. If work on the project must absolutely begin before I-526s are ready to be filed, bridge financing can be used.

The investment funds have to either be committed or be in the process of being invested at the time of filing the I-526 petition. While the funds will usually be completely committed when the I-526 petition is approved, there are also EB-5 immigration policies which dictate the timeline of when the required jobs have to be created based upon the EB-5 investment expenditures.

EB-5 funds must be used for job creation and no other purpose. Therefore, the question to ask is not "what is the period in which a new business can take EB-5 funds?" However, the question that USCIS will ask is, "are these funds being used for job creation or to give the shareholders a return of capital or to pay down existing debt?” If USCIS thinks the funds are being used for the impermissible purposes set forth in the latter options, they will deny the applications of your investors. With that said, if you have a definitive plan to use EB-5, but you invest capital or take a loan solely to cover operations until the EB-5 money is available, USCIS will approve the use of EB-5 money to pay back that capital or pay down that debt. You need an experienced EB-5 attorney to guide you through this process and incorporate the appropriate language into your offering documents.

There is no statutory or regulatory requirement regarding the time period during which a new commercial enterprise must receive EB-5 funds. The enterprise could be formed, obtain a tax ID number, open a bank account and receive EB-5 funds on the same day, or it could lie dormant for years and then receive the capital infusion. Keep in mind that in order to qualify for EB-5 classification, the investor must have invested or be actively in the process of investing the required amount of capital.