Why EB-5 Investors Should Consider Investing Through an EB-5
The EB-5 Immigrant Investor Program is an appealing opportunity for foreign nationals planning to relocate to the United States. The program offers immigrant investors and their immediate family members the chance to receive permanent resident status in the United States in exchange for a qualifying investment in an EB-5 project. This could be the perfect solution to fast-track one’s immigration process.
To qualify for the EB-5 program, an applicant must invest the minimum amount required in a new commercial enterprise (NCE). The minimum investment amount for the EB-5 program is $1.8 million, or $900,000 if the NCE is located in a targeted employment area (TEA). Investors can also choose to invest directly in an EB-5 project or invest through an EB-5 regional center. There are pros and cons to each option. However, investing through an EB-5 regional center offers many advantages that can be appealing to EB-5 investors.
What is a regional center?
EB-5 regional centers are designated by United States Citizenship and Immigration Services (USCIS). Simply put, a regional center is an agency that has demonstrated to USCIS that it is working towards the same goals of the EB-5 program – stimulating the U.S. economy through foreign investment and job creation.
Regional center designation from USCIS qualifies the organization to receive capital from immigrant investors and allows the organization to work as a service agent for investors and developers planning to complete EB-5 projects.
Benefits of investing through a regional center
One of the most attractive reasons that EB-5 investors may choose to invest through an EB-5 regional center is that they pose lower financial and immigration risk to the investor. Regional centers carefully evaluate each project that they associate with to ensure there is low risk for the investors, which offers some reassurance that the project has a relatively high probability of success and will culminate in the investor receiving a U.S. green card.
When investing through a regional center, investors are generally not responsible for day-to-day managerial tasks, whereas in direct investments, they are. In regional center investments, managerial decisions are handled by the regional center manager. This allows investors who lack management experience to still make a successful investment in a new commercial enterprise.
Furthermore, because the EB-5 investor does not have to handle managerial tasks, they are not tied to the geographical location of the project. If they choose to invest through a regional center, they can live, work, and study anywhere in the United States. They can even live in New York while investing in an EB-5 project in Florida.
Another benefit of investing through a regional center is that the project is more likely to be in a TEA, which means the investor only has to invest the lower minimum investment amount of $900,000 in the project. Both regional center and direct EB-5 projects can be in TEAs, but the probability is higher with regional center investments because regional centers specifically seek out TEA projects to work with.
Perhaps the most significant advantage of investing through an EB-5 regional center is the relaxed job creation requirement. The job creation requirement is the same for all EB-5 investors: proving that their investment led to the creation of 10 new full-time jobs for U.S. workers that last at least two years.
However, when investing directly in an NCE, the investor can only count construction jobs and jobs on the payroll of the NCE. When investing through a regional center, the investor can count indirect jobs, including jobs from the NCE’s external suppliers and service providers, as well as jobs created in the community as the NCE employees spend their money. Because of this, investing in a regional center can make it easier to meet the job creation requirement and become eligible for an EB-5 visa.
Finding the Right EB-5 Regional Center
For investors who choose to invest through the regional center route, it is crucial that they do their research and find a high-quality EB-5 regional center. In FY2019 and FY2020, regional centers have been terminated at an unprecedented rate, with 44 regional centers losing their regional center status between March and May 2020. It is extremely important that investors choose a reputable regional center to work with to ensure they do not jeopardize their future in the United States.
Why Some Investors Prefer to Invest Directly
Despite the many advantages of making an EB-5 investment through a regional center, some investors still choose to invest directly in an EB-5 project. One main reason that some EB-5 investors choose this path is so that they can maintain full control over their investment.
When making a direct investment, EB-5 investors are required to be involved in day-to-day managerial tasks. Investors with managerial experience may prefer to retain control over the project and use their managerial skills to contribute to the project’s success. By managing the NCE themselves, they are also able to control their own funds and influence their return on investment.
Investing directly in an EB-5 project also gives investors more freedom when it comes to choosing a project. Because the project does not have to be covered by a regional center, they are able to invest in projects that are not within the geographical scope of an EB-5 regional center.
Whether EB-5 applicants choose to invest directly in an EB-5 project or through a regional center, the EB-5 program offers many great opportunities to investors and their families.
Those with an EB-5 visa can freely live, study, and work in the United States with no restrictions. Investors and their families can travel and conduct business anywhere in the United States without having to deal with the restrictions other visas holders may face. EB-5 visas are also highly beneficial to those hoping to attend a U.S. university, as those with an EB-5 visa can qualify for in-state tuition benefits.
Written on behalf of Sam Silverman of EB5AN: Sam has extensive real estate development, management, financing, and brokerage experience in Florida, Pennsylvania, California, Georgia, and internationally in the People’s Republic of China.
Prior to EB5AN, Sam served as the director of corporate strategy and expansion for professional golfer Jack Nicklaus in the People’s Republic of China, living full time in Beijing. Sam was also previously employed by the Boston Consulting Group, one of the top management consulting and business strategy firms in the world, where he worked directly with Fortune 500 companies in the food service, media, manufacturing, hospitality, and real estate spaces in the U.S., Europe, and Middle East.
Sam is also a Forbes 30 Under 30 National Winner for Social Entrepreneurship. Sam holds a B.A. Economics with a concentration in Mandarin Chinese from Yale University, a Certificate in Financial Accounting from the London School of Economics and Political Science, and an M.B.A. from the Stanford Graduate School of Business.