Understanding
Loan Documents in
EB-5 Project Financing
by Steve Park
Background
Emphasizing the compliance requirements under the EB-5
program and applicable securities laws, EB-5 project teams
frequently defer negotiating definitive financing documents
to a later date. In certain cases, EB-5 project teams may not
want to finalize definitive loan documents when the terms
and timing of senior financing (either debt or equity) are
uncertain or will depend on the amount and timing of the
actual EB-5 funding. However, well-planned financing documents are critical in protecting investors’ interests and should
not be treated as an after-thought or perfunctory post-offering
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step to put the EB-5 funds into the job creating enterprise
(“JCE”) borrower.
EB-5 project financing can take the form of equity or debt
or any combination of the two. Each form brings its own
unique benefits as well as structural challenges to consider
for all parties involved. This article explains the typical loan
arrangement used in EB-5 transactions, focusing on the overall
structure to identify various parties and ancillary loan documents involved and their respective roles in EB-5 transactions.
EB5 INVESTORS MAGAZINE
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