JOB CREATION IS KEY
The synergy between the EB-5 program and government-
sponsored loan programs, particularly SBA loan programs, is
built around job creation. The single most important requirement
of the I-829 approval that grants permanent residency status to
EB-5 investors is the fulfillment of the creation of 10 full-time jobs
per investor.
Often the most basic measurement of the success of a
government-sponsored loan program is also the creation
of new jobs. This is so significant that certain government-
sponsored loan programs, including the SBA 504 loan
program, make job creation a requirement for each borrower.
Currently, the SBA 504 loan program requires each borrower
to create at least one full-time job for each $65,000 in loan
proceeds provided by the SBA.
LEVERAGING GOVERNMENT
RESOURCES AND INVESTOR TRUST
The success of any EB-5 project is initially determined by its EB-5
fundraising efficiency. How the project is structured to make the
investment credible, safe and transparent to the targeted EB-5
investors is paramount.
Government engagement in an EB-5 project may add further
underwriting scrutiny and other benefits EB-5 investors find
attractive, but can vary significantly by loan program type,
ranging from direct guaranty of a portion of the subject project
financing to independent underwriting and processing, capital
raising to co-fund deals or a combination of these.
In the case of the SBA 504 loan program, first, the SBA processes
and underwrites the loan. Then, the SBA issues a bond and
raises funds for the second loan. Finally, the SBA guarantees
the SBA 504 subordinated loan. Regardless of the exact
engagement the government may have, the overall impact made
by dedicated government resources to a particular loan program
and ultimately the EB-5 project is valuable as it adds an additional
layer of scrutiny and protection that EB-5 investors want to see.
Involving government-sponsored loan programs in an EB-5
project has the added benefit that a program likely has a
long track record that EB-5 investors can review to gauge the
likelihood of success based on prior project history.
Compared to the EB-5 program started in 1990, many
government-sponsored loan programs have more extensive
records, often based on a cumulative loan volume of billions
of dollars over the years, to which EB-5 investors can refer. U.S.
federal, state or local endorsement, engagement and direct
investment in the project can facilitate obtaining EB-5 investors’
confidence in the project and positively influence their decision
to invest.
CASE STUDY:
THE MARSHVILLE YOUTH CAMPUS
One good example of EB-5 projects utilizing government-
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