In the last five years, EB-5 financing has become extremely popular in development circles and is being widely used by mainstream, institutional players including government entities such as port authorities, major hotel brands like Marriott and Hilton, other real estate developers for residential, hotel, and condominium projects, restaurant developers, resort developers, marina developers, franchises, manufacturers, mining companies, power generation companies, and other businesses. EB-5 financing has provided low-cost, non-recourse, five to six year term financing for construction and development of new projects and offers a number of advantages to developers.
EB-5 financing has helped create the new LA Live district in downtown Los Angeles. EB-5 financing also contributed to building the Oakland A’s Stadium and the Brooklyn Atlantic Yards including the Barclay Center home of the Brooklyn Nets, as well as numerous hotels, including the SLS Las Vegas, Ritz Carlton in Los Angeles, Four Seasons in New York City, and numerous condominium and franchise projects throughout the United States. In almost every major city across the United States, EB-5 financing has played a role in financing infrastructure, spurring economic growth and development, and fostering job creation. A new economic impact study commissioned by the Association to Invest in the USA (IIUSA) found that the U.S. EB-5 immigrant investor visa program contributed $3.39 billion to U.S. GDP and supported over 42,000 U.S. jobs during fiscal year 2012. The economic stimulus from EB-5 for the year 2012 was double the economic impact of 2011. “The results of the 2012 assessment unequivocally demonstrate that the EB-5 Program is delivering on its promise of regional economic development and U.S. job creation at no cost to the taxpayer.”
There are five questions a developer needs to ask when considering raising capital through the EB-5 Immigrant Investor Program.
1. Will EB-5 work for me on my project?
2. How much capital can I raise?
3. How much will it cost?
4. How long will it take?
5. How can I execute my capital raising strategy most effectively?
To answer the first question, your project must be able to create 10 new US jobs for each investor within two years. However, if partnering with or becoming designated as a Regional Center, you will be able to count direct, indirect, and induced jobs. Secondly, there is no limitation on how much capital you can raise. However, in order to raise money from foreign investors, the project must satisfy the investors’ critical need for certainty that the project will be completed on time and create the necessary jobs in satisfying the EB-5 requirements so that the EB-5 investors will obtain their green cards. Also, the project must also be attractive from an investment standpoint in providing a high degree of comfort that the project will be able to repay the investment in five or six years depending on whether the EB-5 financing is structured as debt or preferred equity.
Thirdly, the costs of the capital raise depends on many factors including, but not limited to, the type of project, how much capital needs to be raised, and whether or not you will partner with a Regional Center or establish a Regional Center. Fourthly, the time frame for job creation for a regional center EB-5 project is the same as for a direct EB-5 project: the jobs must be created within two years of the investor obtaining a conditional green card. The difference between a direct EB-5 and Regional Center Eb-5 is the evidence required to prove job creation. For a regional center project, the proof required for indirect job creation will depend upon the input in the economic impact study and the business plan. In the removal of condition application (form I-829), it is sufficient to show that the assumptions and inputs from the business plans (expenditures, square footage, number of hotel rooms, whatever the case may be) were actually realized. Therefore, that the numbers going into the economic model were achieved.
Lastly, to achieve your business plan and economic model, you will need to make sure to compile an excellent team of advisers to assist you with the process. We can help build your team including recommending, an accountant, a securities attorney, an economist, a business plan writer, and marketing agent(s). We will assist you and your investors with all the immigration compliance. For more information on the EB-5 Immigrant Investor Program, please click here.
If you are looking for an alternative and cost effective approach to raising capital for your development project with tremendous economic benefits for the United States, please consider the EB-5 Immigrant Investor Program. Subhan Law Office, LLC, works with investors, regional centers, developers, financiers, and businesses to promote economic growth and development and job creation in the United States. Contact us to discuss your project and how you can partner with or become designated as a regional center to raise capital through the EB-5 Immigrant Investor Program at 414-223-5718 or toll free at 1-855-946-6848.