Lucas Fuksa and Robert Schaul hosted a roundtable discussion about EB-5 financing at a networking event presented by Commercial Forum (of Chicago Association of Realtors) and CCIM Illinois Chapter. Here you can find the content discussed:
COMMERCIAL ENTERPRISE REQUIREMENT
All EB 5 Investors must invest in a new commercial enterprise.
Commercial enterprise means the business must be for-profit.
The entity may be structured as a sole proprietorship, partnership, holding company, joint venture, corporation, limited liability company, or business trust.
The commercial enterprise is new if it is established after November 29, 1990. A commercial enterprise established on or before November 29, 1990 provide that it either: 1) is restructured or reorganized, or 2) expands so that its net worth or number of employees increases by 40%.
JOB CREATION REQUIREMENT
The new commercial enterprise must create at least ten (10) full time jobs for U.S. workers within two (2) years. Jobs may be direct or indirect. A full-time job is a position that requires a minimum of 35 working hours per week.
Direct jobs are “actual identifiable jobs for qualified employees” held in the new commercial enterprise.
Indirect jobs are jobs “created collaterally”. In order to utilize indirect jobs, investors must go through an EB-5 regional center.
The job requirement may be satisfied by preserving jobs in a troubled business. A troubled business is one that has existed for at least two (2) years and has incurred a net loss of at least 20% of the business’s net worth during the prior 12 or 24 month period.
Investors must invest cash, cash equivalents, inventory, other tangible property, and certain types of secured indebtedness. Investment capital cannot be borrowed. Assets will be valued in United States dollars.
In general, the minimum qualifying investment is $1,000,000. However, in “Targeted Employment Areas”, the minimum requirement is $500,000. A “Targeted Employment Area” is a rural area or an area experience unemployment of 150% or more of the national average. A rural are must be outside a metropolitan statistical area or outside a city/town with a population of 20,000 or more.