Money and structure
Completion guaranty
Also called completion guarantee, construction completion guaranty.
A completion guaranty is a promise by the project sponsor or a creditworthy affiliate to fund cost overruns and finish construction, made to the lender or the project entity rather than to the individual EB-5 investor. It guarantees the building, not the investor's capital and not the jobs.
What it decides
It answers the question the budget cannot: who pays if the project runs out of money before it is finished. For an EB-5 investor that matters because construction that stops is job creation that stops. The term comes from construction and real estate finance, not from immigration law. It is not defined in 8 U.S.C. 1153(b)(5), in 8 CFR 204.6, or in any of the eight chapters of USCIS Policy Manual Volume 6, Part G, and it appears in no EB-5 rulemaking in the Federal Register. In the common regional center structure the new commercial enterprise lends the pooled capital to a job creating entity, so the guaranty runs to the new commercial enterprise in its capacity as lender, and often to the senior construction lender as well. It does not run to the individual investor, and that is the point to check. What the law does settle is the opposite promise. Capital invested with a guaranteed rate of return is excluded from the definition of capital by 8 U.S.C. 1153(b)(5)(D)(ii)(III)(cc), which places no limit on who gives the guarantee. Capital subject to a contractual right to repayment, such as a mandatory redemption or a put held by the investor, is excluded by (dd), but (dd) reaches only an agreement between the investor and the new commercial enterprise, and (D)(ii)(IV) preserves a buy back option exercisable solely at the enterprise's discretion. USCIS states the same at-risk rule at 6 USCIS-PM G.2(A)(2): a guaranteed return is not at risk, and there must be a risk of loss and a chance for gain. So two checks. Read the guarantor's balance sheet, because a guaranty is worth what the guarantor is worth, and USCIS neither reviews nor endorses it. Then confirm the guaranty stops at completing the project and does not in substance promise the investor's money back, since a promise of return or repayment that reaches the investor puts the qualifying capital itself at issue.
Related terms
- Side letterA side letter is a separate written promise between an EB-5 project and one investor, sitting outside the main offering documents and changing what those documents say for that investor alone. It is a securities practice term rather than a USCIS one, and whether it costs the investor the petition depends on which promise it carries.
- Exit strategyExit strategy is the industry name for how and when invested capital is meant to return to the investor, whether through repayment of the project loan, a sale, a refinancing or a buyback. USCIS does not define the term, and immigration law limits it: capital the investor has a contractual right to get back does not count as capital at all.
- Subordination and intercreditor agreementA subordination agreement ranks one creditor's claim behind another's, and an intercreditor agreement sets the order of repayment, control and enforcement rights among two or more lenders to the same project. Neither is an EB-5 instrument. Both turn up in EB-5 because the new commercial enterprise's loan is usually the junior debt in the capital stack.
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