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 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 this opportunity to raise capital for their projects and create an appealing EB 5 offering that attracts foreign investment.

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) earn permanent resident status (Green Cards) for themselves and their immediate family members.

There are two key requirements of an EB5 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 or an area that has unemployment of at least 150% of the U.S. national average. 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 investment creates and sustains at least ten full-time positions for U.S. workers for a minimum of two years.

There are two investment models under the EB5 program. The investor can invest directly in an EB5 project or pool their funds with other investors in 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 investment project. This investment model best suits EB 5 investors who want to own and operate their own NCE with a view to future expansion and increasing their profits. 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 development projects 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 around the world and has injected billions of dollars of funding into U.S. businesses.

A study by EB 5 trade association Invest in the USA (IIUSA) found that in the 2014 and 2015 fiscal years:

  • $10.98 billion in EB 5 funding was made through EB5 regional centers – approximately 2% of all foreign investment into the U.S.
  • EB5 investment and regional center projects contributed more than $23 billion in labor income for U.S workers.
  • Nearly two thirds of EB5 capital investment made through regional centers was invested in the U.S. construction industry, creating over 75,000 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 355,000 jobs for U.S. workers.
  • EB5 investment and regional center projects contributed more than $55 billion to the U.S. economy in terms of Gross Domestic Product (GDP).

The EB5 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 (the program requires periodic statutory authorization which didn’t happen before the 30 June 2021 deadline), IIUSA reported that the lapse in the program affected nearly 12,800 foreign investors who had committed more than $15 billion in capital investment, putting over 486,000 U.S. jobs at stake.

As can be seen, the EB5 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 EB5 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 EB5 investor, a foreign national must be able to invest a minimum of $800,000 in a qualifying EB5 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 EB5 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 EB5 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 EB5 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 EB5 investment, most choose to work with a USCIS-approved EB5 regional center and accept multiple EB 5 investors in a single project. A particular advantage of an EB5 regional center is that the ten full time jobs required under the EB5 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 are a result of 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 together with a one-time filing fee of $17,795. In their 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 EB5 program rules.
  • Identify all natural persons involved with the regional center.

The expert team 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 the first-ever USCIS I-956 approval for our Florida-Georgia regional center.

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

With I-956 approval, the business owner is designated by the USCIS as a regional center and EB5 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 (conditional Green Card).

What an EB5 Investor Looks For in an EB5 Project

Foreign nationals are drawn to projects with low immigration risk—that is, 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 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 alternative sources of funds. Signs that an EB5 investment project is likely to 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, then 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 EB5 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. EB5 investment funds must remain at risk for at least two years. If the investment loan is repaid early then the regional center should be able to reinvest the funds into another project to keep them at risk.
  • The expertise of an EB5 professional. A regional center that collaborates with experienced EB5 professionals improves the chances of successful immigration.

Marketing an EB 5 Project: The Fundamentals

Every EB5 business owner needs a strong marketing strategy to showcase their EB5 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, track records of the regional center and developer, 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. If a migration agent operates in the United States, they are 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.

EB5 investment capital can be an invaluable resource for a business’s projects and the demand for permanent resident status via the EB5 program has never been greater. With increasing competition between regional centers to attract foreign investors, EB5 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 then schedule a call with our team and learn all about the EB5 program.