The majority of EB-5 projects today are structured using a loan model: once funds are deployed into the New Commercial Enterprise, the New Commercial Enterprise then loans that capital to the Job Creating Entity.
The loan structure makes EB-5 investments more appealing for both projects and investors, but the right loan administration strategy is key to meeting compliance requirements.
Like a traditional loan, payments are made over the course of an EB-5 loan’s term.
However, EB-5 compliance requirements prohibit repayment of the loan principle; unlike traditional loans, payments during the loan term are comprised only of interest.
As a result, loan documentation is essential; errors in account calculations or inadequate reporting can jeopardize investors’ immigration outcomes.
Outsourcing loan servicing is a best practice in many similar investments. An experienced third party administrator helps reduce the risk of errors, improve operational efficiency, and simplify compliance with tracking and documentation requirements.
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