Using EB-5 Financing
- EB-5 financing can provide low-cost, non-recourse, five to six year term financing for construction and development of new projects
- EB-5 Funding is sourced via foreign direct investment in the United States
- Funding is achieved by raising capital through the offering of securities by way of Private Placements
- Prevail Capital is a registered Broker Dealer able to conduct EB-5transactions and help Issuers to comply with complex securities laws
EB-5 financing can provide low-cost, non-recourse, five to six year term financing for construction and development of new projects and offers a number of advantages to developers. EB-5 visa regulations do not set any limit on the amount of money that can be raised for a project under the EB-5 program, except the requirement that at least 10 new US jobs must be created for each EB-5 investor within the specified time period.
The sophistication of EB 5 financing has increased dramatically over the last few years and has become a serious alternate funding methodology being used by large real estate developers, private equity funds and large and small corporations in increasingly diverse projects spanning many industries. While there is no limitation in the law as to the type of project that can be funded with EB-5 financing, EB-5 projects tend for the most part to be multi-layered financing and equity structures involving hotels, senior living facilities, multi-family apartment complexes and mixed-used developments, with retail, restaurant and other elements.
EB-5 Funding is sourced via Foreign direct investment in the United States, authorized and regulated under the EB-5 provisions of the United States immigration laws that are structured to assist foreign investors obtain lawful residency (Green Card status).
EB-5 financing is attractive to sponsors/developers that are unable to obtain financing from conventional lenders due to lack of collateral, track record or maybe the nature of a project, EB-5 money is a low cost alternative to these traditional sources of capital and provides more favorable financing terms and reduced financial risk. However, using EB-5 financing is also a securities financing with inherent complexities such as up-front costs, timing implications and securities considerations which must be taken into account. The principal benefit of EB-5 to a foreign investor is access to a potentially expedited process for obtaining U.S. residency while also having the opportunity to participate in a potentially attractive investment.
We are in a climate of increased enforcement of securities laws by the Securities and Exchange Commission, between 2013 and 2015, the SEC has filed eight SEC actions totaling $487 million in civil enforcement, administrative proceedings or criminal cases involving EB-5 funded transactions.
Implications to project sponsors (developers) in using unregistered broker/dealers, improper reliance on exemptions from registration, incorrect reliance on FINRA rules by non-members, frequency of multiple offerings and partial disclosures among others, may lead to systemic project failure, enforcement action and investor rescission rights.
Prevail Capital, as a Broker Dealer with approval to conduct EB-5 business can help Issuers to comply with complex securities laws both in the creation and marketing of an EB-5 project. Prevail provides a wide range of services to assist in creating a viable fund and capital structure for their project that appeals to foreign investors under the EB-5 Program whilst ensuring that all deal structures, fund formation documents, and marketing procedures satisfy regulatory requirements.
Prevail Capital, registered in 2007 aims to produce viable, high quality, attractive EB-5 projects in which both our sponsor partners and their EB-5 partners can be truly confident.