RAPID EB-5 FUNDING: 3 Strategies for Beating the EB-5 Price Increase
In recent weeks LatourLaw Vietnam has received inquiries from many worried Vietnamese investors regarding their options given the imminent EB-5 price increase in December. Today’s blog is intended to offer several rapid funding solutions which AVS EB-5 investors in Vietnam have successfully used in the past. We hope this is helpful to those of you in Vietnam who have decided to proceed before December 7th but who are still concerned about raising funds in time.
One important point to remember: although the current law expires on December 7th, don’t think of that date as the deadline! In order to eliminate any risk of missing the deadline, your I-526 MUST be filed with USCIS BEFORE the termination of the current version of the law. We advise all investors intending to fund before December 7th to contact LL VN immediately to insure that we are able to work on your Source of Funds Analysis and I-526 package to ensure a timely November submission of your case.
Many imminent EB-5 investors in Vietnam are telling us that while they have sufficient assets to meet the $500,000 investment requirement now, the funds are not liquid. Most have the money tied up in real estate and, with the Vietnam RE market in a lull at the moment, the rapid sale of properties we are used to in the market has slowed down substantially. For those folks with such assets who need to fund quickly, here are 3 strategies via which AVS investors have been able to rapidly raise EB-5 funds:
Mortgage Refinancing of Real Estate- Although taking out a mortgage on one’s property means the payment of interest, serious EB-5 prospects need to consider the potential impact of having the price jump from $500,000 to $1,300,000 or more…the mortgage interest you will pay until you sell your property is tiny compared to the price increase Many Vietnamese banks are able to deliver mortgage loan funding quickly, and the US government accepts funds raised through the mortgaging of a property as a valid source of EB-5 capital.
Business Investment Resources- Business owners or high-level, trusted employees who are supported by their companies can use a variety of tools to rapidly fund their EB-5 if other available funds are insufficient. These include inter-partner stock sales (where the EB-5 investor sells a portion of his/her interest to a business partner or even to the company itself, as a stock buyback) as well as corporate loans to valuable employees or owners. As always, the source of funds of the business need to be explained but USCIS will accept this form of EB-5 capital if it is documented properly.
Loan/Funds from Friend or Family- While USCIS recently ruled that an EB-5 investor CANNOT mortgage another person’s property and use those funds for EB-5, it IS possible to have the support of a friend of family member who is willing to help. To be able to use "loan proceeds" from mortgage, an EB-5 investor must show that he or she 1) is personally and primarily liable for the land and 2) owns the collateralized asset that meets or exceeds the value of the loan. (It makes obvious sense that a person cannot create a mortgage obligation for something they do not own!) Accordingly, it can't be a "mortgage loan" (because you don't own the property) but it CAN be a "gift" or a "PERSONAL loan" under EB-5 rules: if your friend or relative is willing , he or she can mortgage their property and pass the proceeds of the mortgage funds to you as a gift or a loan. Again, you’ll have to document the source of funds from the purchase of the property by the borrower through the disbursement of funds from the borrower to you, but this can be done rapidly.
Before embarking on any of these strategies, contact LatourLaw Vietnam at 0918.104.22.168 for a free consultation on what will and will not work under EB-5 rules and GOOD LUCK!
Dec 10, 2018