How Can a Business Access EB-5 Financing?

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Businesses looking to obtain capital and financing for projects in the United States often think of bank loans or securities offerings, but the EB-5 investor program is a little-known investment vehicle that is a viable option for many U.S. businesses looking to raise capital for a new project.

The EB-5 visa program works by linking U.S. businesses seeking to raise capital with foreign investors seeking a U.S. visa. The EB-5 visa program was created as part of the Immigration Act of 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors, and is available for investors who invest a minimum amount of capital in a U.S. business. In order to qualify for the EB-5 investor visa, the following requirements must be met:

  • The foreign national applicant must invest at least $ 1 million in a new commercial enterprise or $500,000 if investing in a Regional Center in a targeted area in a United States.
  • The commercial enterprise receiving the investment funds must create or preserve at least 10 full-time jobs for U.S. workers within two years of the investor’s admission into the United States.
  • The commercial enterprise receiving the investment funds must have been established after November 29, 1990.  If the commercial enterprise was established on or before November 29, 1990, it may still qualify as a “new commercial enterprise” if (i) it was purchased and the existing business was restructured or reorganized so that a new commercial enterprise results, or (ii) it expanded through the investment such that a 40% increase in net worth or number of employees resulted.

Businesses looking to access EB-5 financing generally do the following:

  • Determine whether the project meets the requirements of the EB-5 program, including location in a targeting employment area and satisfaction of the new job requirement.
  • Contact one or more regional centers in the geographic location of the project. The business owner should discuss the terms of a possible project with the regional center and conduct a background check of the individuals sponsoring the regional center to ensure that they have the necessary experience with the proposed project.
  • Contact one or more foreign marketing agents. Some regional centers will provide marketing efforts as part of their EB-5 financing, but many do not. The foreign marketing agent will seek interested foreign investors for a fee.
  • Prepare offering documents for the EB-5 financing. Since most EB-5 financings involve the sale of securities, they must comply with applicable securities laws and regulations, including Regulation D (for private offerings of securities) and Regulation S (for offshore offerings of securities).
  • Negotiate other sources of financing, such as bank loans.
  • Prepare foreign offering documents. The regional center or foreign marketing agent often assists with this process.
  • Market the project in the applicable foreign country.
  • Upon receipt of a subscription agreement and investment funds from the foreign investor, the business owner will commence the immigration process of obtaining an EB-5 visa by filing an I-526 with U.S. Citizenship and Immigration Services.
  • After the project is complete, each EB-5 investors will be required to file an I0829 visa application within two years of the date that he or she received his or her conditional visa.

Topics:  Commercial Loans, EB-5, Visas

Published In: Business Organization Updates, Immigration Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ronald Shapiro | Attorney Advertising

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