Understanding the Different EB-5 Visa Investment Options

The EB-5 Immigrant Investor Program is an appealing immigration opportunity that offers a pathway to permanent residency in the United States. The EB-5 program allows foreign nationals to make an investment in a qualifying U.S. business and, in return, receive permanent residency status–also known as a Green Card.

An EB-5 visa gives the immigrant investor and their immediate family members (spouse and dependent children under the age of 21) the opportunity to live and work anywhere in the United States. After a two-year period of conditional permanent residency status, EB-5 investors qualify for a permanent U.S. Green Card, and may eventually qualify for United States citizenship.

The EB-5 visa program is one of the quickest and simplest ways to obtain a U.S. Green Card. However, there are several different ways to approach an EB-5 visa investment, and it can be difficult to know which one is best for each individual investor.

This article will explore the various types of EB-5 visa investment options and weigh the pros and cons of each to help prospective EB-5 visa applicants choose the best option to begin the immigration process.

What Is the EB-5 Immigrant Investor Program?

The goal of the EB-5 visa program is to promote economic growth in the United States by encouraging job creation through foreign investment. During the visa application process, EB-5 program participants first obtain conditional permanent residency status (also known as a conditional U.S. Green Card) and are then eligible to apply for lawful permanent resident status (also known as a U.S. Green Card) after two years.

In order to qualify for an EB-5 immigrant visa, the individual’s investment must remain committed for two years to a new commercial enterprise (NCE) that will create the required 10 full-time jobs for U.S. workers.

Since the EB-5 Reform and Integrity Act (RIA) was passed in 2022, if the investor’s selected new commercial enterprise is located in a targeted employment area (TEA), then an investment of only $800,000 is required. Otherwise, the minimum investment amount is $1,050,000. More information about targeted employment areas—and the pros and cons of investing in an NCE located in a TEA—will be explored later in this article.

At the end of the two-year conditional permanent residency period, U.S. Citizenship and Immigration Services (USCIS) reviews the status of the investment, and assesses whether job creation totals and other requirements have been fully met. If so, the immigrant investor is granted full U.S. permanent residency status.

EB-5 Investment Options

There are two main EB-5 investment options: a direct investment in a new commercial enterprise, and a regional center investment.

1. Making a Direct Investment in a New Commercial Enterprise (NCE)

Under the EB-5 program, a direct investment is when a foreign national personally invests in a new commercial enterprise. Making a direct investment in an NCE allows an EB-5 investor to maintain an active, day-to-day management role in their business. This is an excellent option for entrepreneurial foreign investors whose goal is to run a business in the United States, and to continue managing it even after they have achieved permanent resident status and obtained their permanent Green Card.

However, in many ways, the EB-5 visa program requirements are more difficult to meet when making a direct investment as opposed to making a regional center investment, which will be explained in greater detail below. Still, a small number of direct investors prefer the higher possible investment returns that this option provides.

Direct Investment Pros:

• More control over the business.
• Potential for greater financial returns.
• Ability to continue operating the business after obtaining a permanent U.S. Green Card.

Direct Investment Cons:

• Required to submit a comprehensive business plan to USCIS.
• More effort required to manage the NCE.
• Higher level of financial risk.
• Stringent job creation criteria (directly creating 10 full-time jobs).

2. Investing Through a Regional Center

Rather than making a direct investment, the majority of EB-5 program applicants choose to make their investment through a regional center. Regional centers are entities designated by USCIS to combine and manage investment capital from immigrant investors.

EB-5 projects that are sponsored by a regional center can accept funding from multiple EB-5 investors. As a result, regional centers usually offer larger projects that have a greater chance of success, when compared to new commercial enterprises available through direct investment. Unlike direct investment projects, individuals who make regional center investments do not need to submit a business plan or be involved in day-to-day management. This can be very appealing to some foreign investors.

There are several advantages to making a regional center investment, including the below.

Ability to count indirect and induced jobs toward job creation requirements

As previously stated, every investment through the EB-5 visa program must create at least 10 full-time jobs for U.S. workers. EB-5 investors who make direct investments in a new commercial enterprise must meet this job creation requirement directly in their company.

On the other hand, regional center investors are not only able to count direct jobs, but also indirect and induced jobs toward their total. Indirect jobs are jobs created by the EB-5 project’s spending on goods and services, and induced jobs are jobs created by employees’ spending in the surrounding area. Indirect and induced jobs resulting from regional center projects are determined by a market analysis and economic impact study.

Because of the inclusion of indirect and induced jobs, investing through a regional center as opposed to a direct investment can make meeting job creation requirements much easier for investors.

Faster processing of immigrant petitions

Unlike with a direct investment, regional centers can submit “exemplar” petitions for their projects for USCIS to approve ahead of time. These exemplar petitions essentially eliminate risks associated with processing delays for each EB-5 investor who chooses to invest in a project through that particular regional center.

Once USCIS approves an exemplar petition, all project-related petitions for that regional center project will be automatically approved, except for the portions of the application related to the individual’s personal information. This may remove some administrative fees, but more importantly, it can have a major impact on an EB-5 investor’s timeline for gaining conditional permanent residence.

Limited NCE management needs

Regional center investors have limited management responsibilities and usually only vote on board decisions. This also means that investing through a regional center is probably not best suited for entrepreneurs who are interested in maintaining an active, long-term role in the business. However, regional centers are excellent options for EB-5 investors whose goal is to obtain U.S. permanent resident status quickly, rather than to establish a company to manage in the long run.

Ultimately, while investing through a regional center can significantly reduce some uncertainties, EB-5 investors should always be wary of unforeseen risks, so it is highly recommended that they consult with experienced immigration experts and attorneys before beginning the process.

Investing in a Targeted Employment Area (TEA)

As previously stated, if an EB-5 investor’s selected NCE is located in a targeted employment area (TEA), then the required minimum investment amount is only $800,000. Otherwise, the minimum investment amount is $1,050,000. A TEA is defined as a designated area within the United States with a population of fewer than 20,000 people, or with an unemployment rate that is at least 150% of the national average.

The lower investment threshold isn’t the only benefit of investing in EB-5 visa projects located in TEAs. Investing in these areas also allows foreign nationals to benefit from set-aside EB-5 visas that amount to about one-third of the available visas in any given year. This can help EB-5 investors avoid visa backlogs, depending on their home country. Rural TEA investors also benefit from faster processing times due to priority processing of Form I-526E immigrant petition.

TEA Investment Pros:

• Lower capital investment threshold.
• Set-aside visas to avoid backlogs.
• Priority processing of Form I-526E in the case of rural investments.

TEA Investment Cons:

• Less flexibility in choosing a location to invest in.

Get Help Choosing the Right Type of Investment for Your EB-5 Visa

Choosing the right investment option is a crucial first step for any prospective EB-5 investor. Every individual’s circumstances are different, and the range of options available to EB-5 investors means that the investment process can be specifically tailored to an individual’s financial means, location preferences, and immigration goals.

Whether making a direct investment or a regional center investment, guidance from experienced immigration lawyers, immigration professionals, and EB-5 program experts is key for a smooth EB-5 visa application experience.

With over 10 EB-5 regional centers that cover the entire continental United States, EB5AN has helped more than 2,300 families from 60 countries move to the United States as lawful permanent residents. Our expert team has more than a decade of experience, and offers clients first-rate, low-risk EB-5 regional center projects with a 100% USCIS project approval rate to date.

To begin your family’s journey toward becoming U.S. Green Card holders, schedule a free meeting with EB5AN today.