Issues Relating to USCIS' Adjudication of Bridge Financing Arrangements in EB-5 Projects

Walter S. Gindin – The EB-5 Immigrant Investor (EB-5) Program is administered by the USCIS and provides opportunities for qualified foreign nationals to achieve permanent legal residency in the U.S. through an investment in USCIS-approved capital investment projects that will generate at least ten full-time jobs for U.S. workers.

The popularity of the EB-5 Program has dramatically increased over the past several years, which, in turn, has led to prolonged adjudication delays that have approached three years in extreme cases. While these delays have understandably inconvenienced investors, they have also negatively impacted certain projects, particularly those that rely on bridge financing. Since mid-2013, USCIS policy has allowed for the use of temporary or bridge financing to fund ongoing development costs pending the availability of EB-5 funds (either following approval of the I-924 Exemplar or individual I-526 Petitions), and, relatedly, has also allowed immigrant investors to claim credit for job creation resulting from the replacement of such temporary or bridge financing with EB-5 capital once available. This policy approach has been enthusiastically welcomed by the EB-5 industry because it recognizes business realities and helps ensure that important projects maintain their feasibility and momentum without becoming casualties of prolonged adjudication delays.

In recent months, however, USCIS has signaled a shift toward a more restrictive interpretation of its long-standing policy on bridge financing. For example, in recent adjudications, USCIS has alleged that bridge financing: (i) may not exceed one (1) year; (ii) must be contemplated before commencement of a project; and (iii) must have a maturity before the anticipated construction completion date. Regrettably, the USCIS has issued notices of its intent to deny projects that rely on bridge financing arrangements that implicate such issues and others.

While there are compelling arguments against USCIS' recent interpretations of its policy, investors nevertheless should be cognizant of projects that rely heavily on bridge or temporary financing to facilitate development for several years before EB-5 capital may become available. For example, when evaluating projects in the current environment, investors should consider the timing of the EB-5 capital infusion into a project relative to the other sources of financing, as well as whether there is sufficient forward-spending so that EB-5 capital may be used to finance future expenditures rather than simply being used to reimburse past spending that may occur years before EB-5 capital is to become available.

Investors should always perform careful due diligence of potential EB-5 investment projects. The USCIS' recent adjudications of bridge financing arrangements only underscores the importance of investors being aware of the latest EB-5 developments and their impacts on existing capital investment opportunities.

Walter S. Gindin, Esq. is a Director and In-house Immigration Counsel at CanAm Enterprises.

Mr. Gindin is primarily responsible for developing and overseeing all aspects of the preparation of Forms I-924, I-526, and I-829 for CanAm's projects, including providing guidance on compliance with EB-5 law, regulations, and policy. Prior to joining CanAm, Mr. Gindin was an associate at a full-service immigration law firm where he handled a variety of EB-5 and non-EB-5 immigration matters.

From 2011-2013, Mr. Gindin served as a law clerk at the U.S. Court of Appeals for the Second Circuit, where he drafted bench memoranda and orders providing case history, legal analysis, and recommended dispositions in appeals and substantive motions concerning diverse areas of law, including immigration, constitutional law, civil rights (42 U.S.C. § 1983), civil procedure, torts, criminal law and procedure, employment discrimination, and appellate procedure and jurisdiction.

Mr. Gindin received a bachelor's degree in economics (magna cum laude) and master's degree in political science (summa cum laude) from New York University in 2005 and 2008, respectively. Mr. Gindin attended the University of Iowa College of Law and received his Juris Doctor (with Distinction) in 2011. Mr. Gindin served as a Note & Comment Editor on the Iowa Law Review and was a member of the law school's Immigration Clinic. He is an active member of the New York State Bar and the American Immigration Lawyers Association, and conducts pro bono representation of asylum applicants through Immigration Equality. 

No offer to sell any security is made by this website. Offerings will be made pursuant to exemptions from registration requirements set out in applicable securities laws. Prospective investors should take note of the risk factors described therein.