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How should a non-regional center enterprise arrange its capital stack with EB-5 funding?

Can a non-regional center entity use a traditional loan (like CMBS or SBA) in addition to the EB-5 equity investment? The EB-5 funds will not be used to replace the debt, but as a direct equity investment. The loan would be obtained by the entity (using entity assets as collateral) in which the EB-5 investor is investing. Normally how much of the capital stack should the EB-5 investment occupy versus the traditional loan?

Answers

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    Usually only about 25 percent to 30 percent. While some are higher, this is the best model.

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    Daniel A Zeft

    Immigration Attorney
    Answered on

    A new commercial enterprise can receive funds from a direct EB-5 investment and other sources of funding. For a direct EB-5 case, the investment from the EB-5 investor could be a portion of the total funding or the entire amount of the funding could come from the EB-5 investor.

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    Belma Chinchoy

    Immigration Attorney
    Answered on

    Yes, you can obtain a loan, including an SBA loan. There is no rule on how much capital can be EB-5 versus other sources; it depends on what your other investors and or lenders will tolerate.

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    Blake Harrison

    Immigration Attorney
    Answered on

    You can use multiple sources of capital for direct EB-5 investments. There are not any immigration requirements related to the breakdown of the capital stack.

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    Dale Schwartz

    Immigration Attorney
    Answered on

    What you propose should be OK.

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    Vaughan de Kirby

    Immigration Attorney
    Answered on

    You need to retain an experienced EB-5 attorney who has successfully set up other investment structures or regional centers.

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    Charles Foster

    Immigration Attorney
    Answered on

    A non-regional center entity may use a traditional loan in addition to the EB-5 equity investment. Normally, the total EB-5 investment should be less than the traditional loan, but that depends upon your prospective EB-5 investors. Many sophisticated EB-5 investors will want to see that the EB-5 project has significant traditional bank financing and the project developer's own equity as well.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    The short answer to your question is yes. For a direct EB-5, just like a regional center EB-5, the invested capital can be combined with other equity or debt to round out the total project cost. The EB-5 investors will get the full credit of job creation for the new commercial enterprise. There are no EB-5 regulations or statutory provisions proscribing a certain capital stack or mix of EB-5 investment versus a traditional loan or developer equity.

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