Whichever part of the EB-5 investment process you find yourself in, whether you’re still just researching or already invested in the program, it’s never too late to learn about EB-5 capital redeployment.
Defining Capital Redeployment
When an investor has an ongoing EB-5 investment project and they are filing form I-829 to lift the conditions from residency, it’s possible to run into additional problems. Because of high numbers of EB-5 investments, especially from countries like China, there can be a backlog of I-829 forms.
When then I-829 filing gets delayed, you may risk losing the eligibility for removing conditions. Specifically, the requirement that the investment funds should be at risk. If the project has been successfully completed and your funds returned to you, they are no longer at risk and will not fulfill the requirement.
In this case, you may need to redeploy the original amount of your EB-5 capital into another project to qualify for the I-829 removal of conditions. This was underlined by a USCIS memo which discussed the problem of funds not being at risk during the I-829 filing.
It’s not unusual to face the prospect of capital redeployment if the job-creating entity (JCE) you’re working with completes the project earlier than anticipated, or if the I-829 form is delayed for longer than normal.
When is Capital Redeployment Necessary?
In a normal, on schedule EB-5 project, you won’t need to redeploy your capital. But if your I-829 form has not been approved, you may not be approved if your capital is not at risk anymore.
Unfortunately, the USCIS has not put out much formal information about this topic, but from what they have released in memos, it’s important to understand the problem and solution. Redeployment is an option you will need to consider if your JCE meets the conditions of the job too quickly, returning the money for the project before the scheduled time.
Ways to Do Capital Redeployment
Keeping your money at risk does not mean that you have to undertake an entirely new EB-5 investment project.
Loaning to the JCE
You may be able to loan the capital to the JCE that you worked with originally. If your experience working with them before was good, it could be a potentially profitable partnership. But there are certain risks to this option.
Make sure to do the research and find out about the new project to which you will be loaning your capital. If it’s a long-term or complex project, it could keep your money tied up for longer than you wanted. Just because the JCE was efficient the first time does not mean they will be again for a different type of project.
Make sure to also understand how profitable the new project is set to be. It should be a project that you can feel comfortable being involved in, especially in terms of risks.
When you’re loaning money to a new JCE, you won’t be subject to the job creation restrictions that were placed on your initial investment project.
Investments outside of the JCE
It is the opinion of some experts that you are not required to invest in another JCE-related project to meet the “capital at risk” requirement. As long as you invest your money somewhere and put it at risk again, it may still count towards the requirement. This might include activities such as purchasing stock or investing in a real estate trust.
The benefit of investing outside of the JCE is that your investment can have higher liquidity, allowing you to regain your money quickly after your I-829 is approved.
Without strict guidelines from the USCIS, it’s hard to determine exactly how capital redeployment needs to be done. But you need to understand it in case you reach a place where your I-829 is stuck processing while your EB-5 investment project has been completed. Capital redeployment may not be a preferable option, however, it can save your chances of successfully removing the conditions on your permanent residency.