Congratulations! If you’re reading this, chances are that you’ve decided to pursue with an EB-5 Visa.
We’ve outlined a few points with the EB-5 Visa process to get you started.
Project due diligence is a major consideration when pursuing an EB-5 investment.
- Which project should you pick?
- What is the risk of the project?
- Does the project create enough jobs to satisfy government requirements?
- How am I going to get my money back?
These are questions, and there are many more that, you should ask when evaluating an EB-5 project.
EB-5 financing can be a complex subject, so for the purposes of this article, we will be breaking down just one of the investment models, with following articles diving into the details of additional business models.
The EB-5 Bond Model
EB-5 Bonds is a unique method that provides investors with a very secure investment while providing an easy exit strategy to return initial investment at the end of the EB-5 process.
Security and liquidity are the two strengths of this type of EB-5 investment model. Because EB-5 investors are investing in municipal bonds, their investment is about as secure as it gets.
Also, because the bonds are issued by a municipality, there is a tremendous amount of transparency that a project must go through in order to be qualified to receive funding for the municipality.
Municipal bonds are a key financial resource for infrastructure projects. Because of the large scale of these projects, EB-5 projects using the bond model are able to count plenty of jobs that easily exceed the ten job per investor minimum, and in many cases, exceed this requirement by creating hundreds of jobs per investor.
Municipal bonds can be some of the most stable investments in the financial industry. The security of a municipal bond is associated with its third-party rating, performed by agencies such as Moody’s, S&P, and Fitch. The higher the bond is rated, or rather the higher the municipality’s credit rating, the more secure the investment, or bond, will be.
For example, take a look at the chart below for the default (failure rate) of municipal bonds.
The first municipal bond offered for the purposes of EB-5 was through a regional center known as Access the USA (AUSA), a company located in the Seattle, Washington area.
Their project was for the purpose of funding a government infrastructure project that built a large bridge in the area. AUSA brought in over $40 million USD in EB-5 funding and purchased Washington state bonds, rated at AAA. If you look at the chart above, that is the highest rating available, and in fact, a AAA municipal bond has never failed in the history of the United States.
If you were an investor looking for a secure investment for your immigration purpose, this is as safe as it gets. You can look at it as a 99.9% success rate.
How Bonds Get Investors their Money Back
Ok, so bonds are secure. We can see that, and they have been accepted as a viable EB-5 investment model by USCIS.
What about the project’s exit strategy?
All investors should inquire, whether for EB-5 or any form of investment,
“How is this investment going to pay me back at the end of my investment period?”
Municipal bonds are unique in EB-5 because there is an actual sales market for the bond itself. Because these bonds are so stable, they are attractive on the open market.
Municipal bonds are bought and sold every day through different exchanges, and because of this, an investor can liquidate their investment at an incredibly fast rate, sometimes in as little as three business days.
Because of the security of the bonds, their value will typically be stable throughout their life cycle, and because EB-5 is a long investment process, long-term bonds are used and investors have the ability to hold the bonds to keep receiving interest payments throughout the life of the bond.
When the EB-5 bond model was created, founder and owner of Access the USA, Mike Mattox, knew that it provided advantages over other EB-5 investments because it helped investors find a secure investment that met their immigration requirements.
He felt that investors should not be subject to risky projects when their immigration status would be tied to the success of their investment. Investors should have their success through the program and receiving their green card as their number one goal when pursuing EB-5, so finding a stable investment that meets the government standards should be their first priority.
Being the first regional center to offer such a model, Mr. Mattox filed a patent for the bond model. He has created a stable investment option for EB-5 investors and has used the model across multiple companies and projects around the United States.
World Trade Center San Francisco is pleased to have Mr. Mattox and his network of companies join forces to offer this EB-5 model to investors around the world.
The information in this article is meant for general information purposes only and should not be taken as legal advice. Please consult an immigration attorney for your specific immigration needs.