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EB-5 Source of Funds for EB5 investment visa

Posted by Kurt Reuss on May 07, 2016

EB 5 source of funds scenarios

If you are applying for an EB-5 visa, providing evidence of income and a lawful path of EB5 funding will be the key to your successful transaction. Since there are a myriad of ways to collect the money you need for your investment, having an expert eb-5 investment attorney to guide you successfully through the documentation process is a key element.

Here are a few common EB-5 source of funds scenarios and how to document them.

EB5 Projects Due Diligence: Project Financing and Use of Funds

Posted by Kurt Reuss on November 27, 2015

EB5 Project Financing 

Rupy Cheema: A primary question of due diligence is how the project is going to be funded and whether the capital stack is complete. If the project will be funded in part by developer equity, we look into how much equity is being committed to the deal. Most agents we speak to, are looking for a minimum of 30% developer equity.

That begs the question “where is that equity coming from?" and “Is it a cash contribution or is it an asset contribution?”   If the developer is contributing land, how are they arriving at the value of the land. Was there an appraisal done? Is the value assigned reasonable and thus is the developer really contributing 30% of the project cost? If the developer plans to contribute cash, at what stage will it be funded?  Is the developer providing an additional equity commitment in case the project needs more money or if the EB5 projects funding does not come in as anticipated.

Part of the project costs may be funded through a secured loan from a bank.  Having a senior lender in the deal brings both advantages and disadvantages to the NCE’s investment. The biggest disadvantage is that the NCE’s investment will likely have only junior or subordinate rights or perhaps no rights at all to the collateral and the biggest advantage is that the EB5 investors have an experienced party involved in the deal, one who is going to conduct its own due diligence. The senior lender will want to make sure that the construction budgets are reasonable and the environmental assessment is complete. They will also ensure that any conditions imposed have been satisfied prior to the disbursement of their loan.