How long it takes to raise EB-5 funds depends on several factors, including how much EB-5 funding is needed and how marketable the project is. Still, raising EB-5 investment capital usually takes several years and requires meticulous planning; EB-5 project developers must procure numerous documents to comply with United States Citizenship and Immigration Services (USCIS) regulations.
For example, new commercial enterprises (NCEs) that want to become eligible for EB-5 funding need a detailed, USCIS-compliant business plan, an employment creation analysis outlining how at least 10 jobs will be created for each investor, and several legal offering documents. These documents include partnership, subscription, escrow, and collateral agreements. Moreover, every NCE needs articles of entity formation.
While an NCE receives the EB-5 investment capital, the job-creating entity (JCE) is responsible for creating the needed jobs. (In direct investment projects, these two entities must be the same, but they are separate in regional center-sponsored projects.) The JCE must have a market or feasibility study, proof that the developer’s capital is irrevocably committed to the project, and information regarding the project developer’s history. Moreover, there must be an exit strategy for investors.
Once project developers have procured the above documents, determined their job creation and capital raise expectations, and opened an escrow account, they can begin to market and subscribe EB-5 investors. Many project developers choose to work with foreign migration agents in other countries. Potential EB-5 investors often learn about available projects through informational seminars, so project developers should produce a compelling portfolio of marketing materials in the investors’ language.
If an EB-5 project cannot wait until the full amount of EB-5 capital is raised, another option may be to structure the project’s capital stack so that EB-5 funds are used to replace other financing. This way, the project could move forward before all the required EB-5 capital has been obtained.
