Continued from page 26
Diagram of a Typical EB-5 Transaction Using Loan Model
EB-5 Regional Center
(Manager of NCE or
EB-5 Loan Agent)
Funding Agent or
Strategic Partner
H
HH
EB-5 Project Fund, LLC
(New Commercial Enterprise
and EB-5 Loan Lender)
B
Broker/Dealer
(Financial Advisor)
D
EB-5 Project Developer, LLC
(Developer of JCE)
C
A
EB-5 Foreign
Investors
K
Escrow/Trust
Account
D
A
EB-5 Project, LLC
(Job Creating Enterprise
and EB-5 Loan Borrower)
E
Other Funding Sources
(e.g., Short-Term Debt
or Equity)
G
F
Senior Lender(s)
EB-5 Project
(EB-5 Project)
Red-dotted lines above indicate a flow of funds. See the key to the foregoing diagram below.
A. The minimum investment, or EB-5 capital contribution, by
each individual investor is $500,000 (or $1 million if the
project is not located in a target employment area (“TEA”),
i.e., a rural area or a high unemployment area). Upon
acceptance by a new commercial enterprise (“NCE”) of an
investor’s subscription, the investor’s capital contribution
is typically placed in an escrow or trust account subject to
release from escrow or trust and disbursal in accordance with
the applicable release conditions contained in the escrow or
trust agreement.
B. In addition, each investor is typically required to pay a
subscription fee along with the $500,000 capital contribution to cover certain legal, marketing, and related costs
and expenses associated with the I-526 Petition, most of
which is likely to be used to compensate migration agents,
consultants, lawyers, or other third parties.
C. NCE, acting as a lender (in such capacity “EB-5 Lender”),
will use the proceeds of an EB-5 offering to provide a multidraw term loan credit facility (the “EB-5 Loan”) to JCE, as a
borrower (in such capacity “EB-5 Borrower”) who will draw
down on the EB-5 Loan as the funds become available.
Often the EB-5 regional center for the deal or its designee
will act as an agent for EB-5 Lender (in such capacity “EB-5
Agent”) under the applicable loan documents. EB-5 Agent
plays an important role in administering the EB-5 Loan as
more fully described below.
D. To evidence the EB-5 Loan, EB-5 Lender, EB-5 Agent,
and EB-5 Borrower enter into various loan documents,
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EB5 INVESTORS MAGAZINE