EB-5 investors should be aware that because all EB-5 investments must consistently continue to be “at risk” in accordance with United States Citizenship and Immigration Services (USCIS) regulations, projects are unable to absolutely ensure a return of the initial primary investment. With that said, EB-5 projects should typically provide a plan for investment return at the end of the project. EB-5 investors should take care to assess this plan for plausibility and legitimacy. One key feature to keep in mind when assessing a plan for repayment is to pinpoint the project’s other forms of funding. If the project has been granted a hefty loan by an established and reputable financial institution in the United States, then the investor can conclude the plan is likely safe.
EB-5 investors may wonder when they will see their investment capital returned to them. The funds they invest in an EB-5 project are attached to the project for at least two years due to the investor’s two year conditional permanent residency duration. External factors may cause a project’s timespan to be prolonged, and in some cases, the initial investment capital isn’t repaid for more than five years.
Prospective EB-5 investors are encouraged to conduct thorough and extensive scrutiny of the relevant documents belonging to a project they’re interested in investing in. If they are unclear over the terms and conditions pertaining to repayment, they should ask for advice from an immigration lawyer or EB-5 industry expert.
A project’s exit strategy will outline how the project intends to generate income and more specifically, how it will return initial investments to its investors. Often modelled after real estate projects, these projects generally use two different structures for exit strategies. The first one entails having the investor sell the project. This strategy requires investors to consider the possibility, timeline, and selling price for the finalized project. The other strategy entails refinancing. In this situation, the investor must consider the possibility that the operations of the project will have stabilized and will produce enough profit.
For EB-5 investors who have received their U.S. green cards upon approval of their I-829 petition and wish to be repaid their initial investment, the most common method is to sell their share in the company.