Business owners in the United States have long benefited from EB-5 investment capital, which has been available since the program’s creation in 1990. The U.S. economy, in general, is in need of investment capital, and EB-5 funds are often available at below-market rates; therefore, subscribing EB-5 investors can be an ideal way to raise funds for a business. In addition, United States Citizenship and Immigration Services (USCIS) requires that every EB-5 investment create at least 10 full-time jobs for U.S. workers. The EB-5 program thus helps combat unemployment.
Since the June 2021 repeal of the Modernization Rule, EB-5 investors have enjoyed a valuable opportunity—they can make an EB-5 investment at only $500,000 provided that the project is located in a targeted employment area (TEA). Previously, the minimum investment amount for TEA projects was $900,000. Many more foreign nationals are now in a position to make an EB-5 investment, but the newly lowered minimum amount is likely to be temporary. In fact, USCIS has already filed an appeal against the courting ruling that invalidated the Modernization Rule. Moreover, either USCIS or the Department of Homeland Security (DHS) could take action at any time to raise the EB5 investment threshold.
How can business owners take advantage of this unique opportunity and raise EB-5 capital? Creating a successful EB-5 project is a complex process that requires meticulous planning and careful execution; USCIS has set out numerous requirements for EB-5 business owners. In this article, we explain how to create an appealing EB-5 project and how to undertake the marketing process.
Creating an EB-5 Project
When evaluating EB-5 investment opportunities, foreign nationals often favor projects with low immigration risk—that is, projects that are sure to comply with the EB-5 program’s regulations and thus enable their investors to receive permanent resident status. Perhaps the most important factor that determines an EB-5 project’s immigration risk is its likelihood of completion.
The most reliable EB-5 projects from an immigration perspective have an alternative source of funds—such as an initial bridge loan—in case they fail to raise all the needed EB-5 capital. Other signs that an EB-5 investment project will likely be completed include a senior loan with a major bank and irrevocably committed funds from the developer.
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. The larger a project’s job cushion, the more appealing it will be to potential EB-5 investors. For example, suppose that a real estate development subscribes 15 EB-5 investors and plans on creating 700 construction-related jobs. When the project is halfway through construction, it will have created approximately 350 jobs—far more than the minimum requirement of 150 jobs. Projects like these have a low immigration risk and are thus easily marketable.
Marketing an EB-5 Project
EB-5 business owners must devise a strong marketing strategy tailored specifically for their target audience; EB-5 investors in different geographic areas have varying expectations when evaluating investment opportunities.
Every EB-5 project needs an appealing set of marketing materials. These materials should include a website portal, printed documents such as brochures, and videos describing the EB-5 project. Many EB-5 business owners use informational seminars to educate potential investors about their offering; these events can take place in person or online. Of course, all marketing materials will need to be translated into the target audience’s language.
Foreign migration agents can be invaluable in referring interested foreign nationals to an EB-5 business. If any of a migration agent’s activities take place in the United States, they will be subject to Securities and Exchange Commission (SEC) regulations. EB-5 project owners must also ensure compliance with the securities regulations of the countries in which their agents will work. Additionally, it is imperative that the migration agents understand the project’s offering and marketing materials—if the information they provide is inaccurate or misleading, the EB-5 business may face legal consequences.
Business owners can greatly benefit from EB5 investment funds, which can be invaluable resources for their projects. Still, creating an appealing and marketable EB-5 business is a complex process. EB-5 business owners are strongly advised to retain an immigration attorney and consult with EB-5 firms.