Creating an EB-5 Compliant Business Plan

The EB-5 investment industry has provided funding for businesses in the United States for over thirty years. Further, the EB-5 program allows foreign nationals to invest in U.S. enterprises in exchange for eligibility for permanent residence. As a result, thousands of jobs have been generated through EB-5 capital.

The EB-5 program continues to be popular in 2021 despite the disruptions caused by the pandemic. The number of foreign nationals looking to invest in EB-5 projects has increased with the repeal of the EB-5 Modernization Rule in June 2021. This change lowered the minimum investment amount for projects located in targeted employment areas (TEAs) from $900,000 to $500,000. Therefore, the EB-5 investment program is now accessible for more foreign nationals, and business owners will have a larger target audience when marketing their EB-5 projects.

Obtaining USCIS Approval

Funding from EB-5 investors can be extremely beneficial to businesses; however, not all enterprises qualify for EB5 investment capital. Business owners need to ensure compliance with United States Citizenship and Immigration Services (USCIS) regulations before receiving EB-5 investment funds. A key step in this approval process is to craft a detailed EB-5 business plan.

A strong EB-5 business plan proves to USCIS as well as to investors that the project is feasible and compliant with EB-5 investment regulations. Of course, the business plan must be completed before the marketing process can begin.

EB-5 business owners should study the Matter of Ho ruling when preparing their business plans. This court ruling outlines the four major elements of a USCIS-compliant EB-5 business plan:

  • A job creation strategy;
  • Operating permits;
  • A marketing plan;
  • Financial projections.

Job Creation

USCIS regulations require EB-5 business projects to create at least 10 full-time jobs per EB-5 investor. Therefore, a project’s strategy for generating employment is an essential element of its business plan. The following information regarding job creation should be included in the business plan:

  • The estimated number of qualifying jobs that will be created;
  • Thorough descriptions of the job positions;
  • A hiring schedule.

Operating Permits

An EB-5 business plan must prove the project is able to operate legally. This entails obtaining all required permits and licenses. Enterprises that have not yet obtained these permits will not be approved by USCIS.

Marketing Plan

In order to obtain funding from EB-5 investors, business owners must market their projects to potential investors. To do so, they may hire foreign migration agents or U.S. brokers. Moreover, all EB-5 projects must create an appealing set of marketing materials.

The marketing materials should clearly indicate how the project complies with USCIS regulations, thus enabling EB-5 investors to subscribe with confidence. To comply with EB-5 rules, the project cannot provide a guarantee of financial return on investment. In addition, the project should aim to create far more than the prerequisite 10 jobs for each investor in case of possible setbacks regarding employment.

Financial Projections

Demonstrating economic feasibility is an important objective of EB-5 business plans. Potential investors need proof that the business is financially viable and likely to reach completion successfully. A compelling EB-5 business proposal must include forecasts and projections about the financial position of the business for its first five years. This data should be supported by reliable data or third-party sources.

Joining the EB-5 investment industry is a challenging but worthwhile endeavor. EB-5 business owners must also comply with USCIS regulations and market their projects to potential investors. Consulting with EB-5 specialists as well as immigration counsel can provide useful information and help developers create successful business plans.