The EB-5 Immigrant Investor Program is a valuable opportunity for foreign nationals and U.S. business owners. The program allows foreign nationals to obtain U.S. permanent resident status in exchange for investing in qualifying U.S. businesses.
Foreign nationals who want to participate in the EB-5 program must adhere to the regulations set out by United States Citizenship and Immigration Services (USCIS). Business owners seeking EB-5 investment capital must also comply with these regulations. Failure to do so will make a project’s investors ineligible for permanent resident status.
Even though raising EB5 investment capital can be challenging, the EB-5 program offers a convenient funding source that is often available at below-market rates. Projects must be structured carefully and have sufficient potential for job creation to attract EB-5 investors.
EB-5 Project Structure
Project developers must choose between structuring their projects as loan or equity investments. Regardless of the investment type, all projects need a new commercial enterprise (NCE)—which receives the EB-5 funds—and a job-creating entity (JCE).
Having decided which investment type is more suitable for their needs, project developers must compile the project’s documentation. This includes legal offering documents, an economic analysis report, and a comprehensive business plan.
An EB-5 business plan must clearly demonstrate that the project is compliant with USCIS requirements. Business owners are advised to refer to the Matter of Ho court ruling, which provides an outline of the elements of a successful EB-5 business plan. These include information regarding the following points:
- Business structure
- Budget
- Key personnel
- Job creation projections
Generating the Required Number of Jobs
According to USCIS regulations, an EB-5 investor only qualifies for permanent resident status if their investment creates at least 10 full-time U.S. jobs. The ability of an EB-5 project to create jobs is therefore crucial to its success.
EB-5 investors are more likely to subscribe to projects that are guaranteed to generate the needed number of jobs. Consequently, project developers should plan on generating more than the required number of jobs per investor, thus creating a job cushion. Such projects are more likely to raise all of their projected EB-5 investment capital.
EB-5 project developers should make compliance with USCIS regulations a priority, ensuring that their businesses qualify for EB-5 funding and attract investors. Still, all EB-5 industry members are advised to consult with an immigration attorney and EB-5 professionals, who can help them keep track of the program’s many guidelines and succeed in the EB5 investment process.
