The world of EB-5 Escrow involves numerous intricacies, and many issuers have learned the hard way that setting up an EB-5 Escrow account should not be left to the last minute. Proper planning and structuring of an EB-5 Escrow account are fundamental elements of the overall EB-5 offering, and they should be addressed concurrently with the finalization of offering documents. Several reasons underscore the importance of early consideration:
Compliance
In today’s EB-5 landscape, heightened oversight is a significant concern. An improper setup of the Escrow account often leads to rejected I-526 or I-829 petitions and, in severe cases, project failure due to noncompliance with rules and regulations.
USCIS petition processing times can be exceptionally long, underscoring the importance of crafting an EB-5 Escrow agreement that effectively balances investor and project needs while adhering to immigration and securities regulations. Neglecting the establishment of an EB-5 Escrow account and the development of an escrow agreement can jeopardize the entire EB-5 project, rendering the time invested in the EB-5 process fruitless.
To avert such pitfalls, engaging experts early in the process is advisable. Their guidance can help ensure a proper setup, mitigating potential problems down the road.
Risk Tolerance
Only a handful of banks are willing to handle EB-5 funds, which is not surprising given the stringent capital lending market, increased regulations, and the complexities of the EB-5 program. EB-5 Escrow deposits involve foreign investor funds and intricate escrow terms. Moreover, the EB-5 industry has faced reputation challenges.
Inexperienced bank managers may hastily make commitments about the bank’s ability to open Escrow accounts for EB-5 clients. This scenario often ends unfavorably. If a bank lacks prior experience with EB-5 funds, the process becomes arduous. The bank’s risk and compliance department may ultimately reject the deal due to the high risk associated with holding EB-5 deposits compared to other alternatives.
Convincing your preferred bank to accept EB-5 deposits is not advisable. Instead, opt for an established bank with a track record of handling EB-5 funds.
Marketing
Today, EB-5 investors and their representatives conduct thorough due diligence. Beyond evaluating the project’s quality and the track record of its principals, investors scrutinize the investment terms, particularly how investment funds will be managed.
Effectively utilizing an EB-5 Escrow account can significantly enhance the marketability of the EB-5 offering. This, in turn, facilitates quicker capital raising with reduced costs. A well-implemented EB-5 Escrow agreement enhances the overall prospects of EB-5 project success. Understanding the options available for EB-5 Escrow is integral to crafting a comprehensive marketing strategy for the EB-5 project.
Work With an EB-5 Escrow Expert
As a best practice, issuers should collaborate with experienced EB-5 Escrow agents who possess a thorough understanding of applicable rules and regulations, ensuring total compliance. The demand for EB-5 funds has never been higher than it is today, making adherence to best practices a critical factor for investors.
To develop your EB-5 project successfully, it is imperative to define your EB-5 Escrow strategy as clearly as possible and allocate sufficient time for its implementation. Fortunately, this process can be streamlined by working with experts who can assist in making vital early-stage decisions regarding your project’s escrow structure. Require assistance in creating an effective EB-5 Escrow strategy? Contact Jurado & Associates, P.A., today to discover how we can support you. Call us at (305) 921-0976 send an email to [email protected], or WhatsApp atĀ +1 (305) 921-0976.
