by David Hirson, Managing Partner, David Hirson & Partners LLP; Nima Korpivaara, Partner, David Hirson & Partners LLP; Phuong Le, Partner, David Hirson & Partners LLP
In this article we explore the evolution of bridge financing in EB-5 projects and the role the United States and Citizenship and Immigration Services (“USCIS”) has played in defining the acceptable parameters and uses for the EB-5 industry. We will trace the USCIS’ position since it officially stated in its May 30, 2013 EB-5 Policy Memorandum that projects could use bridge financing and still be credited with job creation. From there we present a modified definition along with an analytical framework to bridge the understanding between policy and application, so we can explore the current parameters of what USCIS considers acceptable bridge financing for the purposes of job creation.
A MODIFIED DEFINITION & ANALYTICAL FRAMEWORK:
While the general definition of bridge financing is largely unchanged since the May 30, 2013 EB-5 policy memorandum, here’s a modified definition that may be a useful way of understanding USCIS’ intent/adjudication:
Generally, the JCE can use EB-5 funds to repay the JCE’s short-term or temporary funding that is necessary for completion of a project. This is true regardless of when the JCE contemplated the need for bridge financing at the beginning of project development. While not clearly defined, absent any other compelling factors, USCIS has referenced 1-2 years as an acceptable “short-term” to be approximately 1-2 years.
As we will further explore below, while bridge financing was adopted by USCIS as a pragmatic solution to allow projects to overcome unexpected delays and obstacles, the general definition provided by USCIS is best analyzed in conjunction with how the EB-5 market applies adjudication standards to real life situations.