EB5 Investment Pathways
The EB-5 Immigrant Investor Program offers two pathways for immigrant investors to gain permanent residency in the United States: directly in an EB-5 project or through a regional center. Both pathways require an EB-5 investment of a minimum certain amount and the creation of 10 full-time jobs for U.S. workers.
While some investors may opt for a more active management role by directly investing in a project, giving them more control over their EB5 investment capital, most EB-5 applicants work with a regional center. This pathway provides more security and freedom than direct investment and increases the chance that an immigrant investor will be granted permanent resident status.
Important Benefits of EB-5 Regional Center Investment
Higher Likelihood of Finding a TEA Project
EB-5 regional centers generally work with EB-5 projects with targeted employment area (TEA) designation. The required investment for TEA projects is only $900,000, as opposed to the $1.8 million required for non-TEA projects.
Congress provides this incentive to encourage EB-5 investment in high-unemployment or rural areas. A direct investment project in a TEA also qualifies for TEA status, but since most regional center projects have TEA designation, finding a suitable one is easier through a regional center.
An Opportunity for More Freedom and Flexibility
Direct investment in a project generally requires an investor to dedicate extensive time to management. This can be off-putting for investors without relevant experience.
In contrast, making an EB5 investment through a regional center usually requires less managerial responsibility. In most cases, regional center investors participate in an advisory role as limited partners to fulfill the managerial requirements of the EB-5 program but do not have the same day-to-day responsibilities as those who directly invest.
Facilitated Job Creation
An important element of the EB5 investment program is job creation. Immigrant investors must create a minimum of 10 jobs for U.S. workers to qualify for permanent residency. Direct investors often find it tricky to satisfy this requirement as the jobs must be noted on the new commercial enterprise (NCE)’s payroll or be construction jobs lasting more than two years.
The requirements for regional center investors are more flexible, as they may count direct jobs as well as indirect and induced jobs. Indirect and induced jobs are created either because of the NCE’s spending, such as property maintenance, or due to NCE employees spending their wages.
Regional center investors can include an economic report with their I-526 petition documenting the estimated job creation their EB-5 investment has created indirectly. The inclusion of indirect and induced jobs makes it significantly easier for regional center investors to satisfy the job creation requirement for the EB-5 program.
Professional Assistance at Every Stage in the EB-5 Process
EB5 investments require technical knowledge at all stages of the investment and immigration process, ranging from legal expertise to an understanding of detailed EB-5 regulations, and can overwhelm investors. While direct investors have limited resources to turn to, reputable EB-5 regional centers are run by industry experts with decades of experience who can provide investors with advice and guidance. These friendly and professional teams help ensure a project is compliant with all EB-5 regulations and provides the greatest chance of residency approval.
Deciding on an EB-5 Regional Center
Deciding on an EB-5 regional center is critically important. While this type of EB-5 investment is more secure than direct investment, the quality of regional centers can vary dramatically. Immigrant investors should carefully evaluate a regional center’s reputation and team before investing.
Reputation of the Regional Center
An immigrant investor should research the types and volume of EB-5 projects a regional center offers, including the following areas:
- 1) The percentage of EB-5 investors who have previously attained U.S. residency through the regional center
- 2) The track record of I-526 and I-829 petition approvals at the EB-5 regional center
- 3) The number of investors who have had their EB-5 investment capital paid back following the two-year investment period
If any of this information is not publicly available, investors should request it before investing.
The EB-5 Regional Center’s Team
Investing with an EB-5 regional center is an important decision, and immigrant investors need to carefully select a regional center with a team they feel comfortable with. Investors should research the directors and staff of a regional center and determine whether they have relevant credentials and experience.
It is also important for immigrant investors to research the developers an EB-5 regional center works with. Regional centers usually publish information about developers and on-going projects on their website. Researching the contractor and developer teams a regional center works with allows immigrant investors to assess the reputation of an EB-5 regional center and the security of making an EB5 investment through them.