EB5 investment financing can be an ideal source of capital for real estate projects.

How to Find EB5 Investors for Your Business

Business owners have long benefited from investor capital provided by foreign investors through the EB-5 Immigrant Investor Program.

Funds from this source are often available at below-market rates. Therefore, subscribing to EB-5 investors can be an ideal way for businesses to raise funds.

In this article, we will cover how business owners can take advantage of these investment opportunities to raise capital for their projects and create an appealing EB-5 offering.

What Is The EB-5 Program?

The EB-5 program was established by Congress in 1990 to stimulate the economy by encouraging foreign investment in U.S. enterprises to create jobs for American workers.

Foreign nationals who invest in an eligible new commercial enterprise (NCE) receive conditional permanent residency (Green Cards) for themselves and their immediate family members.

There are two key requirements of an EB-5 investment. Firstly, the immigrant investor must invest at least $800,000 in the NCE if it is in a targeted employment area (TEA) or at least $1,050,000 if the investment is outside a TEA.

A TEA is a rural area with unemployment of at least 150% of the U.S. national average, which currently sits at 3.4%.

EB5AN has developed a national TEA map that shows whether a prospective EB-5 project is located in a TEA.

The second key requirement under the EB-5 program is that the project is a job-creating entity.

This means that it must create and sustain at least ten full-time positions for U.S. workers for at least two years.

There are two investment models under the EB-5 program. Investors can invest directly in an EB-5 project or pool their funds with others toward a project sponsored by a regional center.

Regional centers are United States Citizenship and Immigration Services (USCIS)-approved entities that manage EB-5 capital across multiple projects.

Only one investor is permitted per direct equity investment project. Equity investments are usually a great option for EB-5 investors who want to own and operate their NCE with the goal of expanding the business in the future.

Typically, restaurants, retail and wholesale trade businesses, service, manufacturing, technology, and agricultural businesses make good direct investment options.

In contrast to the direct investment model, multiple investors can pool their funds in a regional center project but will typically have less control over the business than their direct investor counterparts.

Large real estate project developers and NCEs that require significant amounts of funding are typically sponsored by a regional center.

The regional center program has proven to be the preferred model for EB-5 investors.

EB5 investment capital has created thousands of jobs and strengthened the U.S. economy.

How the EB-5 Program Has Benefited the U.S. Economy

The EB-5 program has proven to be popular with foreign investors worldwide and has injected billions of dollars of funding into U.S. businesses.

A report by the EB-5 trade association Invest in the USA (IIUSA) shows that since the start of the project:

  • $10.98 billion in EB-5 funding was made through EB-5 regional centers – approximately 2% of all foreign investment into the U.S.
  • EB-5 investment and regional center projects contributed more than $37 billion in labor income for U.S. workers.
  • Nearly two-thirds of EB-5 capital investment made through regional centers was invested in the U.S. construction industry, creating over 72,000 jobs for U.S. construction workers.
  • The remaining third largely comprised capital investment in:
    • Hotels and motels.
    • Real estate.
    • Wholesale trade.
    • Architecture, engineering, and related services.
    • Healthcare.
  • Capital investment in regional centers supported more than 820,000 jobs for U.S. workers.
  • EB-5 investment and regional center projects contributed more than $55 billion to the U.S. economy in terms of Gross Domestic Product (GDP).

The EB-5 program has continued to grow since then.

EB5 investment financing in targeted employment areas injects capital in areas that need it the most.

On 30 June 2021, when the EB-5 Regional Center Program expired, IIUSA reported that the lapse in the program affected nearly 12,800 foreign investors.

They had committed more than $15 billion in capital investment, putting over 486,000 U.S. jobs at stake. As can be seen, the EB-5 program has made its mark on the U.S. economy.

  • It creates both direct and indirect jobs for U.S. workers. In 2017, the U.S. Department of Commerce estimated that each unit of EB-5 investment is expected to create 16 jobs for U.S. workers.
  • Jobs are created for construction workers to build the projects and employees to staff them.
  • In the case of a new hotel or restaurant, the business may drive more traffic to nearby businesses, benefiting the wider community.
  • It generates federal, state, and local government tax revenue from immigrant investors, relieving the tax burden on U.S. citizens.
  • There is increased spending by immigrant investors and their families when residing in the U.S.
  • The program is at zero cost to the U.S. taxpayer.

Are You Eligible To Become An EB-5 Investor?

To become an EB-5 investor, a foreign national must be able to invest a minimum of $800,000 in a qualifying EB-5 project.

However, the investor must be able to prove that their invested capital originated from legal sources. Legal sources include salaries, dividends, gifts from family or friends, inheritances, proceeds from the sale of real estate, and the sale of stocks.

A potential EB-5 investor will first decide whether they want to invest directly in an NCE and be the owner and operator of the business. Or, if they prefer to have a less hands-on approach, invest in a project through a regional center.

Once they have decided on an EB-5 project and invested their funds in an NCE, they file Form I-526—Immigrant Petition by Alien Investor—or I-526E—Immigrant Petition by Regional Center Investor—with the USCIS.

There are two parts to Form I-526/I-526E: the investor must provide evidence of the source of their funds and, secondly, provide details of the specific EB-5 project in which they have invested.

Creating an EB5 investment project requires considerable industry expertise.

Creating An EB-5 Project: Here’s What You Need To Know

While businesses seeking to attract capital from foreign nationals can be funded by direct EB-5 investment, most choose to work with a USCIS-approved EB-5 regional center and accept multiple EB-5 investors in a single project.

A particular advantage of an EB-5 regional center is that the ten full-time jobs required under the EB-5 program per investor can be direct, indirect, or induced.

A direct investment can only count full-time job positions that are directly created by the NCE, while indirect and induced jobs result from a project’s overall economic impact.

To become a regional center, a business must file Form I-956—Application for Regional Center Designation Under the Immigrant Investor Program—with the USCIS and a one-time filing fee of $17,795.

In their investor petition, the regional center applicant must:

  • Define the geographic area in which they will operate.
  • Provide evidence that it will create the requisite jobs.
  • Demonstrate a substantive economic impact on the proposed geographic area.
  • Have comprehensive policies and procedures to ensure compliance with EB-5 program rules.
  • Identify all natural persons involved with the regional center.
  • Prove that any funds were obtained in a legal manner.
  • Provide any supporting documentation, like a business plan and executive summary.

The expert team of immigration attorneys at EB5AN can help you produce all the documentation required for a successful Form I-956 application.

As the leading EB-5 firm, we received our Florida-Georgia regional center’s first-ever USCIS I-956 approval.

With I-956 approval, the business owner is designated by the USCIS as a regional center, and EB-5 investors can then submit I-526 petitions with the regional center’s project documentation.

Once an investor’s I-526 is approved, the investor and his family can obtain conditional permanent resident status—also known as a conditional Green Card.

Work with EB5 investment experts at EB5AN to create an EB5 project and raise quick capital.

What an EB-5 Investor Looks For in an EB-5 Project

Foreign nationals are drawn to projects with low immigration and financial risk—projects that will comply with the EB-5 program’s regulations and thus enable their investors to earn Green Cards.

One of the most important factors determining an EB-5 project’s immigration risk is its likelihood of completion.

The most reliable EB-5 projects, from an immigration perspective, have alternative sources of funds. Signs that an EB-5 investment project will likely be completed include irrevocably committed funds from the developer and a secured loan with a major bank. And should the project fail to raise the expected capital, an investor will want to know if an initial bridge loan is in place.

Since one of the main objectives of the EB-5 investment program is to create jobs, foreign nationals often look for projects that plan to create more than the requisite 10 jobs per investor.

EB-5 investors will find a project more appealing if the project has a job buffer. The larger a project’s job cushion, the lower the immigration risk and easier it will be to market.

Other factors that appeal to EB-5 investors:

  • Projects that already have USCIS approval.
  • The time that the regional center has been functioning. A regional center that has successfully managed many projects will be familiar with the documentation and potential issues.
  • A redeployment plan for investment capital. EB-5 investment funds must remain at risk for at least two years. If the investment loan is repaid early, the regional center should be able to reinvest the funds into another project to keep them at risk.
  • The expertise of an EB-5 professional. A regional center that collaborates with experienced EB-5 professionals improves the chances of successful immigration.

Marketing an EB-5 Project: The Fundamentals

Every EB-5 business owner needs a strong marketing strategy to showcase their EB-5 projects, one that is tailored specifically for their target audience. And investors’ expectations will differ in each geographical area.

Every EB-5 project needs an appealing set of marketing materials that cover location, capital structure, job creation, regional center and developer track records, market research and analysis, timelines, etc. These materials should include the following:

  • A presentation with illustrative images and charts.
  • A video describing the project.
  • A custom project brochure with supporting charts and graphics.
  • Information seminars in person or online to educate potential investors about the project.

And, of course, all marketing materials should be translated into the target audience’s language.

Foreign migration agents can be invaluable in referring interested foreign nationals to an EB-5 business. A migration agent operating in the United States is subject to Securities and Exchange Commission (SEC) regulations.

EB-5 business owners must also comply with the securities regulations of the countries in which their agents will work. It is also imperative that migration agents are familiar with the project details and marketing materials—if they provide misleading or inaccurate information, the EB-5 business owner may face legal consequences.

All migration agents for EB-5 projects must register with USCIS.

While EB5 investment funding is an ideal and cheap source of capital, raising it requires significant experience in the EB-5 investment industry.

Secure Your EB-5 Investment Without The Hassle

EB-5 investment capital can be an invaluable resource for a business’s projects, and the demand for permanent resident status via the EB-5 program has never been greater.

With increasing competition between regional centers to attract foreign investors, EB-5 businesses must hone their marketing strategies to appeal to prospective foreign investors.

If you are interested in taking advantage of this opportunity to attract foreign investment to fund your projects, schedule a call with our team or talk to an immigration attorney to learn about the EB-5 program.

We can also help you manage any direct investments you make toward your own business. Seek professional advice from our immigration experts to secure your future in the U.S., today.