While the use of an escrow is not legally required, it is generally accepted as a best practice for the EB-5 capital raise process. The vast majority of EB-5 offerings promise to refund the investors’ subscription amounts in the event of an I-526 denial, but not all of them can assure the investors that funds will be immediately available for that purpose. With the challenges that Regional Centers already face in raising funds, the competitive advantage of using escrow for funds administration is more valuable now than ever.
Three years ago, NES Financial compiled a list of industry-leading Best Practices for EB-5 escrow administration. Those best practices still ring true today. In case you missed it, here are a few examples:
- Escrow is a foreign concept to many who are unfamiliar with U.S. banking practices. Make sure your investors understand the mechanics of escrows and the security afforded by such structures.
- Not all banks/developers are accustomed to the EB-5 program or the time involved in raising funds or adjudicating the immigration petitions. Work with partners who have the ability to accommodate the needs of your Regional Center, project, and investors.
- Not all escrow arrangements are created equal. Make sure you know when funds can and cannot be released from the account and what items are required as support for each request.
NES Financial’s EB-5 Suite of Solutions has been used by more than 70 Regional Centers on over 170 EB-5 projects to help increase efficiency, reduce risk, and ensure investor confidence.
Read the complete list of Best Practices here.
What is EB-5? Find out more by downloading our EB-5 Solution Kit.
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