Purchase and Renovate Loan Programs

Buying and renovating credit programmes

May I use the EB-5 Visas programme to finance the purchase and refurbishment of hotels? Q: Can I buy an already operated property with EB-5-finance? A EB-5 capital expenditure must provide at least 10 NEW job opportunities for each individual investors. A job that already ends up in an open and functioning property when a purchaser buys the property is not new. Therefore, for most acquisitions of an established and operated property, EB-5 funding is not available as a funding resource for the purchase.

Q: Under what conditions can I use the EB-5 funding to purchase an exisiting property? In principle, there are three instances where a purchaser may be able to use EB-5 funding to purchase an established hotel: The purchase of (1) a property that is considered a "troubled business", (2) an established property that was sold prior to the date of purchase, or (3) a property (or other building) that is to be abandoned for a major refurbishment that will lead to the addition of rooms, restaurants or other new sources of income that did not exist prior to the purchase.

Q: How does a hospitality company qualified as a "crisis company" for EB-5 funding? Discontinued operation is an operation that has been in operation for at least two years and has suffered a net loss of at least 20 per cent of the net assets of the discontinued operation in the last 12 or 24 months preceding the event.

In order to determine whether the firm in difficulty has been in operation for two years, it is assumed that replacements of interest to the firm in difficulty will exist for the same duration as the firm in which they are successful. Therefore, a purchaser of a property who buys a property with the necessary amount of net loss incurred on the basis of the seller's net assets could potentially be classified as a distressed entity.

The EB-5 funding will count the employment created by the purchaser who buys the property and has a new company improvement scheme if the property has been classified as ailing. Q: Can I buy the property and close it myself for renovation to get EB-5 funding?

It is not, the property would have to be sold before the purchaser purchased the property, e.g. in a liquidation or enforcement where the previous proprietor or creditor liquidated the property and the new purchaser intended to reopen it. Q: What happens if I plan to close the property for major refurbishments involving an increase in the number of rooms or an extension to the dining or conference rooms, and I can show that it will generate more revenue as a consequence of the extension?

At this point, you can include the extra staff added by the extension, but you probably won't be able to include the staff already working at the resort when you buy. Q: What happens if I buy a property that is not a real estate at the moment, such as an apartment or business house, and I want to change it into a real estate?

This would be seen as the creation of a new company and all staff whose employment is generated by the new company (including those directly and indirectly employed) could be counted as new staff for EB-5 funding. Q: Suppose I can get EB-5 funding when I buy a room in a hostel, how long will it take for me to get the cash?

Could I get it early enough to use it to complete the purchase? The EB-5 funding is often a multi-month working procedure before you get the funding. Typically a 9 to 12 month timeframe for EB-5 funding is used. Therefore, you may not have the EB-5 funding at your fingertips in order to finance the completion of the purchase of the property.

If so, you may consider receiving a bridging loan or a bridging equity participation to finance the transaction, with appropriate documentary evidence that you plan to pay back the bridging loan or equity with EB-5 funding. Q: How can you help me get EB-5 funding if I am qualified? Working with many US hoteliers and developer companies, we obtain EB-5 funding for the construction of new properties, renovation and expansion of old properties and conversion of nonhotel use.

Assistance is provided in structuring your development in order to obtain EB-5 funding, identifying and negotiating contractual conditions with an accredited local centre in the region where the property is situated, preparing EB-5 proposal documentation and identifying skilled marketers for the development. Our relations are with local centres in many regions of the county and we have over 40 hotels with EB-5 finance used.

It is our aim to tailor the EB-5 funding to the needs of the hotelier. Yes, the EB-5 funding is genuine! However, the EB-5 funding must be used fairly, and its demands (which are defined by the U.S. Citizen and Immigration Services or USCIS) are very particular.

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