Bridge Financing for EB5 Projects
Bridge Financing is used to kick start a new real estate development project. In EB5 capital funding, it removes the initial funding from the foreign investor, creating a more secure investment landscape.
“A bridge loan is often obtained by developers to carry a project while permit approval is sought. Because there is no guarantee the project will happen, the loan might be at a high interest rate and from a specialized lending source that will accept the risk. Once the project is fully entitled, it becomes eligible for loans from more conventional sources that are at lower-interest, for a longer term, and in a greater amount. A construction loan would then be obtained to take out the bridge loan and fund completion of the project.”
In the case of BAI Capital EB5 Projects, the foreign investors funds are the equivalent of the construction loan.
Scott Barnhart of Barnhart Economic Services, explains in the video above how bridge financing works in EB5 Projects.
“Now, bridge financing is just a fancy term for a bank loan or a private equity loan or the developer putting in his own equity and being paid back by the EB5 investment.
Jobs created with a bridge investment, or bridge loan, are fully approved by USCIS and are pretty much the norm these days, because as I’ve said, the EB5 investors and the EB5 investment money takes a long time to get.
So the bridge financing will allow the construction, which it’s in essence a construction loan, will allow the construction to take place with full view that they are going to replace that bridge financing with the EB5 money when it is raised.
So, there is no mystery to that and even one or two or three years down the road, if you’re investing, that’s probably the safest EB5 investment you could make.
Because the jobs are already created and in the bank, so to speak, because they’ve filed the documentations, they’ve created the project, the jobs are already there, now you’re just coming along and making an investment to replace the bridge financing.”
The point to takeaway is that bridge financing creates a scenario that is very secure for the investor. For more information on which BAI Capital EB5 Project is best for you, fill out the form or make a call today.