New alternative ways to access EB-5 capital have been emerging for those who want to find new sources of capital for their development projects without wishing to navigate the often-choppy waters of EB-5.
There are now an increasing number of both experienced and new financiers who are adding EB-5 capital to their lineup of options for raising capital for their developer clients. These financiers will essentially take care of everything EB-5 for their clients while offering them the opportunity to access capital from EB-5 investors. These EB-5 financiers will make capital available to their clients in a manner that is akin to financing models that adhere to common industry standards.
A New Twist
EB-5 financiers have already been in existence in a de-facto sort of way in the form of already-approved EB-5 regional centers who make their centers available to project developers for a fee, saving them the need to set up their own regional center. These EB-5 regional centers will offer varying levels of service ranging from simply offering developers a regional center ‘shell’ to work under, all the way to complete project management of the application process and getting the investors. This approach, however, still leaves developers with a considerable amount of work and challenge in that they must often manage the approval of the project itself and it often leaves the developers to go and find their own investors overseas. This might work for some, but others might prefer to have everything managed by another party in a way that is consistent, reliable and readily available for all projects.
Considerations when looking to submit a project under an existing regional center:
The developer has to find the ‘right’ regional center with the right approvals for industry and geography
The developer must do their due diligence on the regional center and its operators
Developers are still subject to the potential reputation impact on the regional center should another of their ‘sponsored’ projects fail
Each deal must be negotiated on a case-by-case basis, with each regional center manager wanting to approach things in a different way and offering differing levels of service
The main advantage is maintaining a certain amount of control of the fundraising process while removing the need (and time and expense) of attaining a regional center approval
Benefits of the EB-5 financier approach:
Bypassing the management of the often-tricky I-924 process
Developers can work with experienced financiers, who will properly vet projects according to industry standards
Developers can work with a financing model familiar to them
Developers benefit from not having to raise their own funds from individuals overseas (arguably the hardest part), instead relying upon the financier's already-existing network with overseas investors
When considering starting an EB-5 regional center, developers who do not wish to be distracted by the process may do well to consider this option.
If you have a regional center that you would like to make available to investors, call or email me to let me know, so I can add you to my list. Similarly, if you are a project developer looking for an EB-5 financier or just a regional center to work under, call or email me to let me know.
Phil Cohen is the founder and President of Strategic Element, a company that focuses on developing regional centers, EB-5 business plans, economic impact reports, feasibility studies and custom 'direct' EB-5 projects for its clients (www.strategicelementconsulting.com).