Every EB-5 investor has two ways to invest in the EB-5 Immigrant Investor Program: directly into a program-approved project or through an EB-5 regional center. Those who choose direct project investment route tend to prefer greater day-to-day engagement in their new commercial enterprise (NCE).
That said, by-and-large, the majority of EB-5 program participants elect a regional center investment. Here’s why:
- Regional center projects are more likely to be located in targeted employment areas (TEAs), which require a much lower initial investment.
- Investors are generally not required to engage in day-to-day management work, freeing up their time and allowing them to live anywhere in the United States, regardless of their project’s location.
- Job creation requirements on TEA-based projects are also more relaxed, which helps make the EB-5 green card qualification process easier.
So, if the program is so popular, why is there a chance it won’t be renewed in the new fiscal year?
The EB-5 Regional Center Program Is Not Written into Law
Despite regional center investment popularity, the fact remains that the EB-5 Regional Center Program is not a permanent immigration solution according to law. Instead, Congress has opted to temporarily reauthorize the program for a year at a time (or less) over the last five years. On September 30, 2020, the program will expire. So, officials are currently developing a resolution that will most likely include another program reauthorization.
What Regional Center Program Reauthorization Will Look Like
Reauthorization in 2021 will likely bring no changes to the 2020 EB-5 program. Previous years’ EB-5 program reauthorization requests didn’t require any changes. Besides, being so close to the expiration date, there isn’t really enough time to introduce any comprehensive legislation for evaluation anyway.
What does this mean for EB-5 investors who are interested in working with a regional center? Essentially, that there’s no reason to worry about the program expiring. And, in all likelihood, there will be no change to your ability to proceed with a regional center investment. This popular option isn’t expected to go anywhere anytime soon.
For EB-5 investors still deciding on how to invest foreign capital in the United States, learn more about why you might want to invest through a regional center in the first place.
Direct Benefits of the EB-5 Regional Center Program
Although the EB-5 program will most likely continue on regardless of whether the Regional Center Program is renewed, if it’s not renewed, investor interest will probably wane, primarily because of how attractive working with a regional center is to the majority of investors. Direct EB-5 project investment requires greater participation and attention in the daily management of the NCE. While this setup does offer more control over an investment, the commitment can too much for investors with less direct managerial experience and/or with more on their plates than just an EB-5 project.
Limited Partnership Offers Investors Greater Freedom
Limited partnership is more attractive to the majority of EB-5 investors, and working with a regional center can usually satisfy this requirement. Common responsibilities include company or board voting obligations and overarching project decisions. Limited participation also allows an investor greater freedom in their choice of where to live.
Relaxed Job Creation Requirements Provide Easier Paths to Residency
To secure unconditional permanent resident status in the United States, a primary EB-5 investment requirement is minimum job creation. Specifically, every investor must show their investment created a minimum of 10 full-time jobs for U.S. workers, and those jobs must remain viable for at least the duration of the investor’s two-year conditional permanent residence. While a direct investment in a qualified EB-5 project requires that those jobs specifically exist on the NCE’s payroll or be directly involved in the construction of a project, when working with a regional center, that’s not the case. Instead, indirect jobs that are funded through NCE expenses as well as jobs funded by NCE employee wage spending in the community (indirect jobs) also count.
The EB-5 Program as a U.S. Economic Booster
The economic aftermath of the COVID-19 pandemic in the United States is estimated to continue well into FY2021. As the United States begins to emerge from mass lockdown, the EB-5 program has proven itself a solid economic booster and can help create U.S. jobs as the country regains its footing. And the Regional Center Program is well-equipped to distribute new wealth into the areas that need it most faster and more efficiently than each individual EB-5 investor can.