Exit strategy
EB-5 petitioners will want to make an investment with an exit strategy that is reasonably aligned with the competition of their two-year sustainment period, the period that an investor is required to keep his or her capital investment “at risk.”
Loan investments compared with equity investments
An EB-5 regional center investment must be an equity investment into an EB-5 fund, but that fund can choose to make either loan that capital to an investment projects or invest it as equity into the project.
Loans have maturity dates and therefor provide more certainty with regards to repayment. Equity investments into the job-creating entity (JCE) do not have such an obligation to make a repayment of the EB-5 capital at a required time.
Investors should keep in mind that loans to the JCE will often include options for loan extensions; thus they should be aware of who determines if a loan can be extended beyond the maturity date and if all investors are subject to the same repayment date or not. Sometimes loans to the JCE can have different maturity dates to accommodate the different times various investors will fulfill their investment-sustainment periods.
