The EB-5 investor visa is one of the most direct paths to a U.S. Green Card for yourself and your family. With straightforward requirements and several new immigration benefits, getting an EB-5 Green Card is now more accessible and faster than before.
Still, investing in an EB-5 project involves two distinct layers of risk: immigration and financial risk.
Simply making an EB-5 investment does not guarantee that you and your family will get U.S. Green Cards. Rather, USCIS requires that your EB-5 funding is used to create at least 10 new jobs. This is the main requirement to immigrate through the EB-5 program.
Regarding financial risk, USCIS does not allow EB-5 investors to be guaranteed a repayment of their invested funds. Rather, EB-5 investors must be open to both financial gains and losses. This is known as the “at-risk” requirement.
These two risk factors mean that both your immigration and financial interests hang in the balance when you make any EB-5 investment.
Still, this does not mean that you are required to invest in a risky EB-5 project. In fact, through careful research, you can minimize your immigration and financial risk by finding an EB-5 project where the risk has been largely mitigated given the advanced development stage of the project with many EB-5 jobs already created, and a proven, profitable business model.
Since 2013, EB5AN has helped more than 2,300 investors from over the world through the EB-5 regional center investment process. Our priority is to help investors make informed decisions that will protect both their immigration and financial interests.
We’ve developed a straightforward list of six key questions to ask when evaluating an EB-5 project. These are the most important factors that determine an EB-5 project’s level of risk.
If you get written answers to the following questions, you will be in a good position to compare different EB-5 projects and choose the safest option.
We’ll show you the best—and worst—answers to each question to help you determine which EB-5 project has higher chances of success.
1. Has the Project Created All the Required Jobs for its EB-5 Investors?
2. Does the Regional Center Have a Solid Track Record?
3. Does the Project Developer Have a Solid Track Record and a Strong Financial Standing?
4. Does the EB-5 Project Share its Financial Statements?
5. Does the Project Have an EB-5 Repayment Guaranty?
6. Are There Conflicts of Interest Between the EB-5 Regional Center and the Project Entity?
Maximizing Your Chances of Financial and Immigration Success
1. Has the Project Created All the Required Jobs for its EB-5 Investors?
As mentioned above, job creation is the key requirement for an EB-5 Green Card.
In most EB-5 projects, job creation is not calculated based on the project’s actual number of employees. Rather, econometric modeling is used to calculate job creation based on a project’s construction spending or revenue creation.
Each $1 million of construction costs or $1 million of revenue creation counts toward a project’s number of EB-5-eligible jobs.
It is safer to choose an EB-5 project that will create mostly create jobs through construction spending, and not revenue creation. Future revenues may be significantly lower than projected in a project’s business plan. Further, it may take many years for certain real estate asset types to start generating revenue.
This job calculation method makes it very risky for EB-5 investors to choose projects that are still in the early stages of construction. Most likely, these projects have not yet had significant construction spending or revenue creation.
Of course, EB-5 projects that have not started construction at all are even riskier.
The best practice is to invest in an EB-5 project that has already created all the required jobs for its EB-5 investors.
An EB-5 project’s previous construction spending or revenues—made before you invest in it— can still count toward fulfilling your job creation quota. Therefore, EB-5 projects that are well under construction are generally safer options.
Worst Answer
The EB-5 project has not yet started construction or is still in the early stages. It has not created enough EB-5-eligible jobs through construction spending or revenue. The project plans on creating its EB-5 jobs through future revenue.
Best Answer
The EB-5 project has created all required jobs for all of its EB-5 investors and is well under construction.
2. Does the Regional Center Have a Solid Track Record?
Regional centers play a key role in raising EB-5 capital and administering the flow of funds into EB-5 projects.
As USCIS-licensed entities, regional centers use their EB-5 investors’ funds to purchase equity in an EB-5 project or make a loan to the project. In this way, the investors’ funds can be used by the project for job creation.
Since regional centers play a key role in managing EB-5 funding, it’s crucial to choose a quality regional center.
First, you need to make sure that the regional center you’ll be investing with is approved by USCIS and remains in good standing.
Then, look at their track record of prior EB-5 projects. The best regional center operators have been active in the EB-5 industry for several years and have sponsored a number of projects.
Have all of the regional center’s prior projects received USCIS approval? Have they all created the required jobs for their EB-5 investors?
Have these projects all received I-526 approvals? (Form I-526/I-526E is the initial application for a temporary EB-5 Green Card. The conditions on an EB-5 investor’s Green Card are later removed through Form I-829—if the investor creates at least 10 jobs.)
While a history of I-526 approvals is important, the most experienced and reliable regional centers have also received approvals for Form I-829.
Regional centers with I-829 approvals have demonstrated their ability to help investors get permanent U.S. Green Cards.
You should also consider the types of projects the regional center has sponsored in the past.
Were these projects developed by the same company as the project you plan to invest in? Are they in the same asset class (single-family homes, condominiums, etc.)?
If the regional center’s past successful projects are similar to the one they are currently offering, this increases your chances of success.
Learn more about EB-5 regional centers.
Worst Answer
The regional center will not provide written proof that it is licensed by USCIS and remains in good standing.
The regional center has a limited track record with few—or no— previous EB-5 projects.
The regional center may also have a history of previous projects, but these were denied by USCIS and received no I-526 or I-829 approvals. These projects failed to create enough jobs for all of their EB-5 investors.
Best Answer
The regional center provides a copy of its USCIS approval letter and proof that it remains in good standing.
The regional center has a history of several USCIS-approved EB-5 projects. Investors in these projects have received both I-526 and I-829 approval. All the regional center’s previous projects created the required jobs for their EB-5 investors.
The regional center’s previous successful projects are nearly identical (same developer and asset class) to the project they are currently offering.
3. Does the Project Developer Have a Solid Track Record and a Strong Financial Standing?
The project developer is responsible for bringing the EB-5 project to completion and documenting EB-5-eligible job creation and the flow of funds. The financial outcome of the project will ultimately determine whether you get your invested funds back.
Therefore, it’s essential to choose a project developer with a track record of successful projects.
Look for a developer with several completed EB-5 projects that created all the necessary jobs and succeeded financially. Of course, all of a developer’s past EB-5 projects should have received USCIS approval and I-526/I-829 approvals.
Don’t only consider a developer’s past EB-5 projects. Find out whether the developer has previously completed non-EB-5 projects over a span of several years.
In fact, the best developers don’t raise EB-5 funding for all of their projects; only a small number of their projects should involve EB-5 capital.
This indicates that the developer isn’t reliant on alternative forms of funding like EB-5 capital and is creditworthy enough to secure financing from traditional sources.
Has the developer successfully completed several projects in the same asset class they are now offering you (single-family housing, condominiums, etc.)?
Has the developer recently been able to secure new financing or loans for its projects?
Has the developer ever defaulted on a loan or failed to complete a project? This is an important red flag.
The larger and more diversified a developer’s project portfolio, the better. A developer with a wide variety of projects in various locations will have the resources to adapt to market changes and make sure each project is completed.
For further guidance, read “How to Choose a Reliable EB-5 Project Developer.”
Worst Answer
The developer has a history of few or no completed previous projects—or their project portfolio is small and concentrated on a single asset class or geographic area.
This is the developer’s first EB-5 project. The developer has repeatedly failed to complete projects and repay its loans.
If the developer has previous EB-5 projects, these have failed to get USCIS approval and I-526/I-829 approvals.
The developer may also be raising EB-5 funding for all or most of its EB-5 projects, having failed to secure traditional funding.
The developer has never completed a project in the same asset class they are now offering.
Best Answer
The developer has been active for many years, with a large, diverse portfolio across the United States.
While most of its projects do not raise EB-5 funding, it has a track record of several USCIS-approved and completed EB-5 projects.
The developer has never failed to repay a loan or complete a project—EB-5 or otherwise.
It has already successfully completed several nearly identical projects to the EB-5 project that is now available.
4. Does the EB-5 Project Share its Financial Statements?
It’s essential to examine each EB-5 project’s financial statements. If a project refuses to share its financial statements, this can be a red flag. It may indicate little to no revenue, a significant amount of debt, or substantial losses.
Always insist on seeing the financial statements before investing in an EB-5 project. This includes the financial statements of the guarantor company committed to repaying the EB-5 funds loaned to the project (see point 5 below).
The two most important financial statements for EB-5 investors are the balance sheet and the income statement.
The balance sheet will show the project company’s (and, if applicable, the repayment guarantor company’s) assets, liabilities, and equity. Equity is the company’s value when you subtract its liabilities from its assets.
The income statement shows the company’s revenue, expenses, and resulting operating profit (or loss).
Read our comprehensive guide on analyzing an EB-5 project’s financial statements.
Worst Answer
The EB-5 project refuses to share its financial statements. If it does share its financial statements, the balance sheet shows that the EB-5 project’s (and/or the guarantor company’s) liabilities exceed its assets. The project may have very little equity that is far less than the amount of the EB-5 loan.
The income statement shows few expenses. Since job creation is calculated based on construction spending, this can be a major risk factor for the project’s EB-5 investors.
In addition, the project has little to no revenue even though it is already in the later stages of development. (Early-stage projects will understandably have little to no revenue.)
Best Answer
The EB-5 project is willing to share its financial statements.
The balance sheet shows that both the EB-5 project and the guarantor company have significant equity. The guarantor company’s equity is far larger than the amount of the EB-5 loan, ensuring that they will be able to repay the loan if necessary.
The income statement shows that the project is already spending money, but its income exceeds costs. Ideally, the project is already profitable and generating revenue.
5. Does the Project Have an EB-5 Repayment Guaranty?
When a regional center loans the EB-5 funds to a project, the EB-5 investment fund or “new commercial enterprise” may receive a repayment guaranty from a related company controlled by the EB-5 project developer that is benefiting from the EB-5 loan. This means that the company providing the repayment guaranty—the guarantor— promises to repay the EB-5 loan using its assets if the EB-5 company borrowing the EB-5 loan is unable to repay.
When structured correctly, this significantly increases the financial security of the EB-5 investment for investors. Even if the project itself fails to repay the EB-5 loan, a separate guarantor will then be obligated to repay the EB-5 investment fund.
However, for a repayment guaranty to truly have value, the guarantor must be well-capitalized and be 100% independent from the EB-5 investment fund. Its assets and net equity should be significantly more than the value of the EB-5 loan (as disclosed in the financial statements).
Learn more about how EB-5 repayment guaranties work.
Worst Answer
The EB-5 investment fund has not received a repayment guaranty.
If it does offer a repayment guaranty, it won’t provide the guarantor’s financial statements. Or the guarantor’s financial statements may show that its assets and net equity are less than the amount of the EB-5 loan.
The guarantor and the EB-5 investment fund manager are affiliated and thus have conflicts of interest.
The guarantor has not been able to secure financing from institutional lenders, has failed to repay debts, and does not have diversified assets.
Best Answer
The EB-5 investment fund has secured a repayment guaranty with an independent, third-party guarantor and grants you access to the guarantor’s financial statements.
The guarantor’s assets and net equity far exceed the value of the EB-5 loan. The guarantor has a proven track record and has successfully raised financing from institutional lenders. It has never failed to repay its loans.
The more substantial and diversified the guarantor’s assets are, the better.
The guarantor is independent of the EB-5 regional center and the EB-5 investment fund, with no common ownership or control.
6. Are There Conflicts of Interest Between the EB-5 Regional Center and the Project Entity?
Any affiliations between the EB-5 regional center and the project developer increase investor risk. If the project encounters financial setbacks, the regional center may then fail to protect its EB-5 investors due to the conflict of interest. The investors will be less likely to get a timely repayment of their invested funds.
For example, suppose that an EB-5 project is developing an apartment building. The project has secured a senior loan from a bank besides raising EB-5 funding.
Rental revenues turn out to be significantly less than projected, and the project is unable to repay the senior loan.
In this case, the project developer is affiliated with the regional center and/or the EB-5 investment fund. This allows the developer to delay the repayment of the EB-5 investors’ funds or relegate investors to a lower priority tier in the project’s capital structure—either of which can be disastrous for EB-5 investors.
Learn more about identifying regional center-developer conflicts of interest.
Worst Answer
The regional center and EB-5 project developer are affiliated. They may even share the same name. The developer owns all or part of the regional center, or there is a financial relationship between both entities.
This conflict of interest should be disclosed in writing in the project’s offering documents.
Best Answer
The project offering documents disclose no financial relationship, joint ownership, or other form of affiliation between the project developer and the regional center.
Maximizing Your Chances of Financial and Immigration Success
While there are many factors to consider when evaluating an EB-5 project, getting written answers to these six questions will provide you with a good understanding of each EB-5 project’s risk profile.
While you won’t be able to completely eliminate all the risks, you can significantly increase your chances of financial and immigration success. Through careful research, you can get U.S. Green Cards for yourself and your family—and also get a timely return on your invested capital.
