Character can be defined as the behavioral traits leading to whether the EB-5 project developer will make good on their commitment. It describes the person’s: honesty, integrity, reputation and how they treat others.
As a lender for many decades, we believe that knowing borrowers “Character” is extremely crucial. We just won’t lend money to a person or business that has questionable character. However, good character does not materially affect our decision to fund their project.
Clues that help us determine Character include: personal and business credit scores, management’s personal and business reputation, whether management is “greedy” or do they give back to other organizations, bank and supplier reference letters, etc. The bottom line question is, have they previously honored and fulfilled their commitments? Further, Is it likely that they will do so in the future?
The Enron debacle is a good example of what can go wrong when an team of competent and experienced professional’s gets together, but have questionable Character. Our view is: if we would be willing to lend the principals many thousands of dollars on a “handshake”… they pass the Character assessment. Otherwise, we pass on the financing… and so should an EB-5 investor.