EB-5 visa requires investment of capital and creation of American jobs. The U.S. Citizenship and Immigration Services (USCIS) requires that the EB-5 capital invested by the EB-5 investors should be sustained or be at-risk for at least two years after receipt of the conditional green card. This 2-year period is also known as “sustainment period”. Sometimes, due to longer than expected processing times or retrogression, there are delays in receipt of conditional green cards by the EB-5 investors. This delay may result in redeployment or re-investment of the EB-5 funds beyond the initial loan term for the EB-5 investors to meet the two-year sustainment requirement post receipt of conditional green card.
What is Capital Redeployment?
Capital redeployment is reinvesting of EB-5 funds once the project sponsor has repaid to meet the two-year at-risk requirement of USCIS. This is done by either extending the initial loan term or by reinvesting the capital in another project. Capital redeployment is triggered under following circumstances:
- The borrower has repaid the funds early after creating the requisite number of EB-5 jobs and all or some of the investors have not been able to complete the 2-year sustainment period.
- There are processing delays due to high volume of petitions being filed, or USCIS being understaffed or consulate closures resulting in delay in issuance of conditional green cards which triggers redeployment of funds after the maturity of the loan term.
Where is Your Capital Redeployed?
Capital redeployment is considered safer than original EB-5 investment as it does not carry the burden of job creation. As a result, it can be invested in projects that are nearing completion or renovation of existing buildings. While redeployed capital does not have to be within a Targeted Employment Area (TEA), it must stay within the approved geographical scope of the regional center sponsoring the project. More specifically, your capital must be redeployed into another commercial enterprise. Simply investing in the stock market does not meet the “at-risk” requirements outlined by the USCIS. USCIS clearly states that “there must be a risk of loss and a chance for gain” in any redeployment investment to meet the at-risk requirement.
Redeployment can only happen after the EB-5 project meets all the requirements. This includes that all capital has been invested in the job creating enterprise (JCE), that 10 jobs are created for each EB-5 investor, and that most of the goals detailed in the business plan have been met.
How Frequently is Capital Redeployed?
As mentioned above, your EB-5 capital must remain at-risk during your two-year conditional residence period. Capital redeployment varies on a case-to-case basis. However, with increasing wait times due to backlogs and long processing times at USCIS, capital redeployment is becoming a more likely scenario.
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