The EB-5 Immigrant Investor Program is one of the most straightforward methods of getting a Green Card. The U.S. government designed the EB-5 program to increase foreign investments to help the American economy grow. Foreign investors, on the other hand, can get Green Cards for themselves and their immediate family members, namely spouses and unmarried children under the age of 21.
There are two fundamental ways to invest in an EB-5 new commercial enterprise, each with its own requirements. This article will discuss the differences between the two options, as well as the basic steps of choosing a low-risk EB-5 project.
Types of EB-5 Investments
Steps to Selecting a Low-Risk EB-5 Project
- 1. Perform Risk Assessment
- 2. Evaluate the Project Developer or Regional Center
- 3. Review the Financial Implications
- 4. Maintain Compliance with the Law
- 5. Seek Professional Guidance
Work with EB5AN to Find the Best EB-5 Project for You
Types of EB-5 Investments
Direct Investments
To participate in this type of investment, investors must invest directly in a business. An initial investment of at least $1,050,000 is required. The investment level drops to $800,000 if the project is in a targeted employment area (TEA). Additionally, the investment should create 10 full-time jobs and maintain them for at least two years.
A big draw of direct investment is the investor’s ability to control the EB-5 investment. The investor operates independently and is actively involved in the day-to-day operations of the business. However, the law does not allow multiple investors to pool funds for this type of project, and direct investors cannot count indirect or induced jobs towards the EB-5 job creation requirement.
Also, direct investments are high-risk as the key factor determining their success is the investor’s ability to run the business.
In other words, the direct investment model is suitable for experienced investors who want complete control over their investments, and who are willing to take bigger financial and immigration risks.
Regional Center Investments
Regional centers are essentially economic entities designated by the United States Citizenship and Immigration Services (USCIS) to facilitate investments in EB-5 projects. In contrast to direct investment, several investors can pool their funds to support a single EB-5 regional center project. The most common type of project in this category is real estate development.
The regional center handles most of the complicated paperwork, and the job creation requirements in regional center EB-5 projects are less strict. The minimum investment amounts stay the same, however, projects backed by regional centers usually carry fewer immigration risks.
The main difference between regional center investments and direct investments is that foreign nationals have little control over their regional center investments. Because of this, regional centers are perfect for investors who prefer not to be involved in the day-to-day operations of the EB-5 project.
Steps to Selecting a Low-Risk EB-5 Project
The majority of EB-5 investors invest through regional centers. However, the decision to invest in a specific EB-5 project can be significant, so it is crucial to conduct thorough research and consider all options when it comes to project selection. Here are some essential steps to assist you in choosing the ideal EB-5 project:
1. Perform Risk Assessment
Before choosing an EB-5 project, an investor must understand the EB-5 Immigrant Investor Program. They must also perform a risk assessment.
To do this, investors must first consider the local economy where their EB-5 project is located. Finding demand for the products and services offered by the project can assist in determining the project’s risk and provide valuable information about its future.
They should also consider factors like the project’s business model, financing sources, market trends, and potential regulatory challenges. The project’s construction timeline plays a major role in risk assessment, as delays can impact both financial returns and immigration timelines.
2. Evaluate the Project Developer or Regional Center
Besides gathering market data, investors must undertake due diligence when selecting a regional center or project developer. EB-5 investors should look for experienced regional centers and developers with a proven record of completing EB-5 projects with minimal losses. Also, they must have enough financial resources to support the project if needed.
Foreign investors considering regional center investments must determine whether the regional center is a reputable organization with a track record of success that consistently adheres to EB-5 regulations.
Regional center and developer due diligence should also include reviewing their past compliance with EB-5 regulations and transparency in communication with investors.
3. Review the Financial Implications
When investing in EB-5 projects, foreign nationals are usually faced with two different aspects to consider—repayment or return on investment, and obtaining permanent residency in the U.S. The latter is typically the principal factor. Most investors try to find a middle ground between the two to avoid giving up one goal for the other.
EB-5 investors must have access to a project’s business plan and offering documents to validate the project’s assumptions, and see if they align with their investment and immigration goals. These documents should include details about the total money raised and the project’s estimated costs, as well as a well-defined exit strategy.
You should also look closely at the project’s capital stack, including debt financing and potential EB-5 loan terms, to better understand its financial viability.
Potential investors can determine whether a project is a good fit by analyzing the above information and gathering reliable risk assessment data.
4. Maintain Compliance with the Law
Besides the minimum investment threshold and job creation rules, investors must follow other general laws to qualify for a Green Card through the EB-5 program.
To meet USCIS requirements, investors must prove that the funds were obtained legally. This process is commonly called EB-5 source of funds. To do this correctly, supporting documentation (like tax returns, financial statements or records) is needed. Also, investors need to prove that their investments in NCEs are “at risk” and offer no guarantees of any return of capital.
Investors must successfully complete the visa application process, which includes submitting all necessary documents on time and in full.
Finally, as EB-5 investments can be considered securities, investors must ensure their investments comply with U.S. securities regulations.
5. Seek Professional Guidance
Given the complexity of the U.S. immigration system, foreign investors should consult with an immigration attorney specializing in EB-5 matters. This allows them to receive expert advice and avoid costly mistakes that could jeopardize their immigration process.
Another recommendation is to hire a financial advisor who can provide professional oversight into the selected project’s capital structure, as well as design viable return on investment and exit strategies. A qualified financial advisor can also evaluate the job creation estimates and overall viability of the EB-5 project’s business plan.
Work with EB5AN to Find the Best EB-5 Project for You
As part of due diligence, investors must verify any data or information provided by regional centers and project developers when selecting the right project for themselves. An established track record of success and investor testimonials can guide them through these steps.
In general, choosing experienced professionals with expertise in EB-5 investments and immigration law is key. They understand the complexities of the program and can provide tailored guidance. By staying updated on USCIS policies, they ensure compliance and increase the chances of a smooth and successful EB-5 process.
EB5AN has helped more than 2,300 families from 60 countries relocate to the U.S. 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.
If you need more information about how to apply for the EB-5 program or want our opinion on your application, feel free to book a call with our EB-5 team.
