How to look at EB-5 projects from a credit perspective
If the EB-5 investor has a legitimate source of income from employment , they do not need to prove how all the other funds in their account or accounts were acquired ; they only need to prove that the funds came from that source .
TThe EB-5 visa program , while offering a unique opportunity for U . S . residency through investment , involves complex financial undertakings and potential risks that several parties must manage with meticulous care . Underwriting an EB-5 loan can be complicated and time-consuming . Let ’ s explore the core concepts for underwriting : “ 5 Cs of credit ” - Character , Capacity , Capital , Collateral , and Conditions - and an overview of the risk evaluation of a prospective EB-5 project .
By John Shen
Lenders Can Enhance the Security of the EB-5 Capital
Character – Trustworthiness of the management team Character evaluates the trustworthiness and reliability of the key stakeholders involved in an EB-5 project , particularly those who own 20 % or more of the borrowing entity . It focuses on their track record of managing debt and adhering to financial commitments on time . From an EB-5 investor ’ s perspective , understanding the character of project managers and developers means examining their historical performance in previous ventures , which provides reassurance that they can manage the project effectively and ethically .
Capacity – Financial ability of sustaining the investment Capacity refers to the ability of the project to generate enough income to cover its debt payments , beyond just the projected income . This includes considering any guarantees from related parties such as parent companies , affiliates , or individual sponsors which serve as secondary sources of repayment . This ensures that there are additional layers of financial support which safeguard the investment and enhance its ability to meet
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