The EB-5 Immigrant Investor Program continues to attract numerous foreign investors each year. EB-5 investment funds greatly benefit the U.S. economy because all investors are required to create at least 10 full-time jobs.
United States Citizenship and Immigration Services (USCIS) scrutinizes every EB-5 investment to ensure compliance with its regulations. If an EB-5 investor falls short of these requirements, they will not qualify for permanent residency. By ensuring compliance with USCIS criteria, project developers can make their projects more appealing to investors. Other factors that can increase interest in an EB-5 project include targeted employment area (TEA) designation and having alternative sources of funds in the capital stack.
If a foreign national’s EB-5 investment fails to create 10 jobs, their petition for permanent residency will be denied. Consequently, EB-5 project developers should aim to create more than the minimum number of jobs per investor. Projects with large job cushions are considered safer and are therefore more attractive.
Some investors prefer to subscribe to projects that have already created the needed jobs. For instance, a construction project with 10 investor slots may be able to create 100 jobs by the time construction is halfway through. Investors who subscribe at this stage will have already met the employment creation requirement.
EB-5 projects located in TEAs are particularly appealing to prospective EB-5 investors. TEA projects offer an attractive minimum investment threshold of $500,000, whereas non-TEA projects require a minimum investment of $1,000,000.
To allow their investors to subscribe at only $500,000, business owners should familiarize themselves with the criteria for TEA designation and select a qualifying location for their project. TEAs can be designated in rural or high-unemployment locations. All data used to obtain TEA designation must be supported by reliable third-party sources.
Alternative Funding Sources
Projects with a diverse capital stack are more attractive to potential investors than those relying solely on EB-5 investment capital. Overreliance on EB-5 funding leaves a project vulnerable to failure if not all of the expected EB-5 capital is raised. Non-EB-5 funding sources could include an initial bridge loan or another source of debt or equity. From an immigration standpoint, these funding sources make projects more secure.
As the EB5 investment industry continues to attract investors from around the world, U.S. project developers can take many steps to make their EB-5 project competitive. Projects with solid job creation potential, a diverse capital stack, and TEA designation are likely to obtain EB-5 funding. To help project developers navigate the complex EB-5 program successfully, EB5AN offers personalized consulting services and has helped numerous project developers raise EB-5 funds.