What Makes a Good EB5 Regional Center?

Learn more about the advantages of the regional center program and how to choose a quality regional center.

How Can I Choose a Reliable EB5 Regional Center?

All foreign nationals applying for an EB-5 visa will make many key decisions during the process.

One of the earliest and most important of these is choosing between making a direct investment or investing through a regional center—this is also known as indirect investment.

These investment models differ greatly regarding the job creation requirements, making it crucial for investors to carefully consider each. Foreign nationals who decide to invest in a regional center must then choose between the many available options.

The quality and experience of a center can directly impact the immigration process.

What is an EB5 Regional Center?

The EB-5 Regional Center Program was created in 1992, just two years after the EB-5 Immigrant Investor Program was established in 1990.

To obtain regional center designation, an entity must apply to United States Citizenship and Immigration Services (USCIS). Regional center designation authorizes an entity to work as a service agent for investors and developers in the EB-5 program.

Under USCIS regulations, regional centers stimulate the economy in a specific region through foreign investment and job creation.

Regional centers positively impact many necessary industries such as education, transportation, affordable housing, health care, and much more.

NCEs in Regional Center Investments

Regardless of which investment model an investor chooses, their foreign investment capital will go to a qualifying new commercial enterprise (NCE).

However, like many other aspects of the investment models, the NCE is handled differently in each one.

During the first two years of the EB-5 program, a direct investment in an NCE was the only option for investors. Through the direct investment model, an investor sends their funds to the NCE of their choice.

The creation of the regional center program introduced an alternative by allowing regional centers to pool capital from many foreign investors to fund several EB-5 projects.

This arrangement makes it easier to meet the EB-5 job requirement.

Why Would Investors Choose Regional Centers Over Direct Investment?

The regional center program is, by far, the more popular option available to foreign investors.

Regional centers offer a wider array of projects than direct investments, which are typically limited to projects like franchises, retail stores, and hotels.

While some investors still choose direct investments, 95% of all EB-5 project investments are through the regional center program. This can be attributed to differences like more project options, the control an investor has, what kind of jobs can be counted, and how job creation is calculated.

Active vs. Passive Involvement

A foreign national who chooses the direct investment route may have considerable influence and control over the business. They are often required to be actively involved with the NCE, which entails management, decision-making, and general day-to-day business operations. While this is ideal for certain investors, the vast majority prefer a more “hands-off” approach.

Typically, a regional center project is structured so that investors are limited partners.

Additionally, an investor in a regional center is usually one of many. Because of this, investors are usually passively involved with the NCE. Although they are given voting rights due to being limited partners, they have very little to do with business operations, management, or decision-making.

Still, an investor’s degree of involvement ultimately depends on the NCE’s management structure, not on the type of investment.

Direct, Indirect, and Induced Jobs

A successful EB-5 investment must create at least 10 job positions per investor. These positions must be occupied by qualified U.S. workers.

Direct investment projects can only count direct jobs—full-time positions that appear on the payroll—towards the total job creation requirement. This is where regional center investments have a significant advantage.

Investors in regional centers can also count indirect and induced jobs, which result from the NCE’s overall economic impact, making it much easier to reach the minimum requirement.

How Job Creation is Calculated

A major difference between direct investments and regional centers is how job creation is proven to USCIS. Again, regional centers offer a distinct advantage over direct investments in this area.

For direct investments, investors are often personally responsible for providing supporting documentation that proves the creation of 10 full-time direct jobs for U.S. workers.

The documentation will likely include each worker’s W-2 form. In contrast, regional center projects work with an economist to prepare an impact study that shows how many indirect and induced jobs an EB-5 project will create.

How Do I Know Which EB5 Regional Center Is Best?

With so many regional center project options available, an investor is faced with the decision of choosing which one to invest through. Fortunately, there are resources and strategies investors can utilize to find the best EB5 regional center to suit their needs.

Researching Each Option

To begin proper due diligence, an investor needs to examine a regional center’s management team, focusing on their past experience and backgrounds.

Another main point of consideration is analyzing past projects sponsored by the regional center.

A track record of success is one of the best indicators of future success. Investors must also consider how many projects a center has sponsored, how many previous investors have received I-526 petition and I-829 petition approval, and the rate of capital return at the end of the loan term.

Another key part of due diligence is researching whether the regional center has worked on projects similar to the one an investor is considering.

Relevant information includes whether the center has worked with the project developer in the past and if they have experience with projects in the same field.

USCIS-Approved Regional Centers

All regional centers must be approved by USCIS, but investors must keep in mind that USCIS approval is not the same as an endorsement. A regional center’s EB-5 compliance and compliance with securities laws should still be examined.

Immigrating to the United States Through a Regional Center

Choosing between regional center investments is one of the most important decisions an EB-5 investor can make.

Finding the best EB-5 regional center often takes thorough research and due diligence. Information on a regional center’s management team and past experiences can offer the best insight into a center’s quality.

However, resources such as immigration counsel and industry consultants can also provide valuable guidance. Investors who follow these steps and seek professional advice can find the best EB-5 regional center for them and help secure safe and successful immigration into the United States.

Foreign nationals considering the EB-5 program as investors or developers can take the next step by booking a call with EB5 Affiliate Network (EB5AN) to learn more.

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