Foreign Investors Program Renewed

Brian Hicks.
Managing Director.
MidAmerican Global Ventures.

Amidst the moment-to-moment news blitz coming out of Washington DC, it’s easy for news-worthy items to be missed. But a program as successful as the EB-5 Program, also known as the U.S. Immigrant Investor Program, should not be lost in the headlines.  That the EB-5 program was once again renewed as part of the recently passed Congressional Omnibus Appropriations Act is a win for businesses, communities and foreign investors alike.

The EB-5 Program was created more than 25 years ago by the Immigration Act of 1990 to encourage wealthy foreign nationals to invest and create full-time American jobs in the United States in exchange for the opportunity to obtain U.S. permanent residency, often referred to as a Green Card.

While a foreign investor can make a direct investment in a project that they actively manage, the more common action is for an investor to invest his or her funds through a designated U.S. Citizenship and Immigration Services EB-5 Regional Center.  EB-5 Regional Centers can then pool many investor funds together to invest in larger projects.  Regional Centers then manage all of the federal reporting requirements for these investors and the companies borrowing the funds.  Generally EB-5 funds provide between 10 and 30 percent of the capital stack of a new construction project.

The foreign investor is primarily motivated by access to the Green Card and not for a particular ROI.  Therefore, EB-5 financing can be very attractive for U.S. developers or companies borrowing the funds.  Often EB-5 financing can be structured as non-recourse, interest-only loans for a 6-8+ year period at very competitive rates and is often subordinated to a senior lender.

The foreign investor typically invests $500,000 in a “Targeted Employment Area” (inner city, rural, higher unemployment areas, etc.).  The project must create at least 10 new full-time jobs for American workers in the U.S.  When investing through a designated Regional Center, the project is allowed to count indirect and induced jobs (i.e. construction jobs) created by the project in addition to any direct jobs associated with the project.

Brian Hicks is the Managing Director for MidAmerican Global Ventures (MAG Ventures), an EB-5 Regional Center in the State of Ohio. Structured as a true public-private partnership, whose partners include the Toledo Port Authority, Columbus-Franklin County Finance Authority, the Finance Fund, Columbus 2020, among others.  MAG Ventures works with Ohio developers and businesses to secure EB-5 capital and has funded a number of projects across Ohio.  Learn more at: http://www.midamericanglobal.com/