TOTAL EB-5 INVESTMENT SIZE:
EB-5 investments typically are between $10 million-$250 million. Each foreign investor typically invests $500,000 (for projects located in a TEA) to obtain a permanent residence status in the USA.
QUALIFICATION:
Typically each $500,000 investment (applicant) should create ~10 permanent jobs (direct and indirect). Note: permanent jobs as defined by the Department of Labor are those sustained for >24 months.
DEVELOPMENT APPLICATIONS:
EB-5 funds must be used directly in permanent job creation. For developments with construction periods in excess of 24 months the hard cost construction costs are eligible for EB-5 investment typically at 50% of the hard cost budget. This should typically equate to ~1/3 of the total development cost.
USE OF RELATED PROJECTS:
If there are related projects (typically local government or government agency projects) you may utilize, subject to the agency’s approval and support, those hard cost construction budgets in the definition of your project and obtain additional job count for EB-5 Investment.
INTEREST RATE:
For senior debt, EB-5 rates are typically 3%-5%. For subordinate debt the rates are 5%-9%. Typically the loans carry monthly payments of interest only.
TERMS:
Typically 5 year term loans with two 1-year extension options. Non-recourse except to the asset in the event of default. Must demonstrate EB-5 capital is invested directly into permanent job creating expenditure.
PROCESS/TIME FRAME:
9-12 months to start a new EB-5 Regional Center.
1-3 months to get project prequalified.
1-6 months to raise money into escrow. Funds may be released at this point.
6-12 months to get applicants approved by INS and Homeland Security.
ESTIMATED COSTS:
$50,000-$75,000 Legal for regional center
$35,000-$50,000 Legal for project approval (including PPM)
$20,000 & up for project feasibility study and projected job count report
PROS:
1. Low cost debt or middle or the capital stack funds.
2. Funding amount is based on job count
3. Funds may be used for construction financing or as a mini-perm take-out for construction financing.
CONS:
1. Extended time frame to obtain funding – typically 5-10 months with existing Regional Center and 18 months if you need to start a new Regional Center.
2. Surety of execution.
3. Relatively high upfront costs
