An essential condition to qualify for the EB-5 visa is that the applicant must make an ‘at-risk’ investment. Simply put, you must face the risk of loss of investment and cannot be guaranteed return of the investment you have made in the EB-5 project.
Yet, there is nothing in the EB-5 rules that prohibit recovery of the investment made into the EB-5 project.
You are granted conditional permanent residence upon approval of your I-526 petition. To qualify for removal of conditions, you must
- Maintain your at-risk investment in the EB-5 project until removal of conditions, and
- Create ten permanent jobs for US citizens or permanent residents.
If these two conditions are met and you are granted unconditional permanent residence, then your EB-5 project investment becomes just another investment and you are free to seek recovery of your funds after your I-829 approval.
How your funds will be returned is something that should be finalized at the time of finalizing your investment with the Regional Center. This is likely to be determined in the private placement memorandum and limited partnership agreement where you and other investors become limited partners and the Regional Center becomes the general partner.
Different projects have different exit strategies depending on how the investment made by the New Commercial Enterprise into the Job Creating Enterprise has been structured. These strategies may include:
- Complete liquidation of the project, return of original investments to the EB-5 applicants, and distribution of excess funds as profits.
- The project leverages the enhanced equity to refinance the EB-5 loan to repay investors without liquidating the entire project.
- If structured as an equity investment, then there may be only annual distribution of investment returns with exit from the project left to the independent efforts of the EB-5 investor.
Only generic exit strategies can be identified since specific details involve multiple investment-centric variables like the project’s structure and market feasibility as well as immigration-centric variables like processing timeline for approval of I-526 and I-829 petitions, retrogression, and other factors.
With many investment and immigration-related variables impacting return on investment and the significant time lag between finalizing the exit strategy and actual return of investment after I-829 approval, it is advisable to work with an investment and immigration expert to create a viable exit strategy without adversely impacting the at-risk requirement of the EB-5 program.
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