Smart money: Get to know EB-5
William C. Fisher
The Fifth Employment-Based Visa Preference (“EB-5”) was enacted by Congress in 1990 and is administered by the United States Citizenship and Immigration Service.
EB-5 can assist for-profit and, under the right circumstances, nonprofit organizations in financing and even replacing existing debt or equity, in a project.
The goal is to provide a motivation for foreign nationals who have access to adequate capital ($500,000 in targeted employment areas or rural areas) to invest in American businesses and create at least 10 full-time jobs per investor. It allows qualified immigrants and members of the investor's family permanent residence on a two-year conditional basis with a path to permanent residence, or a green card.
“Senior living and healthcare operators have had a good working relationship with EB-5,” says Brian Garcia, managing director for the Regional Center of South Florida.
USCIS requires validation that all capital investments are classified as “at risk” with no guarantees being made by the project to the investor. EB-5 regulations prohibit the guarantee of the return of the capital investment by any regional center or related investment fund. Sponsored investments are structured in several different ways but investors prefer to liquidate profitably in approximately five years.
Many healthcare facilities have been built using EB-5 funding. There are no specific guidelines for the business terms of EB-5 funding or the interest rate. Investors are mainly concerned about getting a green card and the return of their money.
Hopefully, your financial advisor should have the knowledge and willingness to share such innovative financing programs with you.