How to Choose the Right EB-5 Regional Center to Minimize Your Risks?
The EB-5 Investor Visa program allows foreign nationals to qualify for immigration to the U.S. by investing in qualified economic development projects with Regional Centers designated by the USCIS. This guide explains the factors you should consider before deciding where to invest your funds.
EB-5 Investors have different motivations for investing their money in a specific Regional Center.The most common reasons include:
a. Greatly increasing the probability of obtaining US residency
b. Reducing initial investment risk
c. Pursuing a great business opportunity that maximizes the return on investment
d. Entering a specific industry
The latter factor is not normally considered as important, but it may still be factor that is helpful in narrowing down the number of regional centers on which you concentrate your search. It's normally best to first consider the most practical and common-sense things. For instance, if you know that you definitely don't want to invest in a tech project, that understanding will help you quickly determine which projects to eliminate from your research.
Greatly Increasing the Probability of Obtaining US Permanent ResidencyObtaining US residency (i.e., green card) is normally the driving factor behind foreign investor's decision to partner with a specific regional center. To get a better feel for what the investor's chances are of success, it helps to start with a surface-level overview of the regional center's profile and its players. Begin by looking at the performance data for different regional centers (more importantly, the regional center's project that you are considering).
a. Number of I-526 and I-829 Petitions: The investor's main point of interest will be the number of EB-5 applications that have been filed, approved and denied. You would ideally find a center that has no history of denials.
b. Experience of the Principal/General Partner: The EB-5 investor's chances of success increase with project leadership that has demonstrated not only past experience specific to what you need, but also success. Has they managed an immigrant investor program before? What's their track record with creating jobs? Past performance is no guarantee of future success. However, the more impressive their history, the more confident you can be that the project you choose may succeed.
It will also help to know the following profile information:
c. Whether the Regional Center's Project has Obtained Pre-Approval: This does not tell you definitively whether your EB-5 case will be a "slam dunk," but it can serve as somewhat of an indicator.
d. Age of the Regional Center: The longer it has been in existence, the more likely you'll find historical data on I-526 and I-829 petitions.
One of the most important determinants for obtaining condition removal is job creation.a. Job Creation Reality Check: How does the project propose to create jobs? Does the plan make sense?
b. Protections to Help the Project Achieve Job Creation: What protections are built into the project to ensure that you and management will be able to regularly check in on the project's progress toward the goal of job creation? If the project appears to be falling short along the way, is there a contingency plan?
c. Overshooting the Job Creation Target: It makes sense for a project to project the creation of far more jobs than is required so that if the project falls a little bit short of its target, it can still meet the job creation requirement.
Protecting Your InvestmentContinue on to analyze how the investment is structured, what your costs will be and what will happen with your money.
a. Investment Amount: Almost always, the amount you will be required to invest in a regional center will be $500,000 plus the cost of additional fees that can reach up to $60,000 or sometimes even more. What will hardly ever vary is your initial investment of $500,000. The additional fees, however, can serve as part of your determination. [Note: The minimum EB-5 investment amount is $500K in a Targeted Employment Area (TEA) as of writing of this article in November 2016. U.S. Congress may increase the amount in the future.]
b. Escrow: Will your money be deposited in an escrow account? Look for regional centers that give you back your investment money, if your 1-526 petition is denied.
c. Percentage of EB-5 Money Invested in the Project: Investors can feel a little more confident that the general partner will be motivated to succeed when that general partner has some of his own money at risk in the project.
d. Likelihood of the Project Obtaining Needed Capital: What indicators do you see that the project will reach its base level of capital required to launch the project? Is project launch and success heavily dependent on obtaining a great number of investments from EB-5 investors who have not yet filed? How much does the project's success depend on obtaining a bank loan and what are the chances? The less dependent, the better. The closer the project is to reaching that goal, the better. Investing later in the game enables you to feel more confident that the project will launch. If the project ultimately fails, however, your "late-comer" status can hurt you as one of the last to receive what remains of the distributions.
Does the EB-5 Project Make Business Sense?Look at the business plan. Does it all follow common sense? For this, you may want the advice of a business consultant or financial advisor to help you assess whether the plan is logical and whether the management team has a good shot at executing it successfully.
Given that the process of selecting a regional center can be complicated and time-consuming, please know that the above suggestions are not comprehensive, but rather an important sampling of the things you will need to consider. Please be sure to contact us for immigration-related advice that is specific to your circumstance.