Suppose you are a foreign national who is seeking lawful permanent residence for yourself or your immediate family in the United States. In that case, you may qualify for a green card by becoming an EB5 investor through the EB5 visa program by making a direct investment or investing through an EB5 Regional Center.
Choosing which EB5 project is right for you is likely the most critical and challenging part of your petition for a green card. Your permanent green card EB5 petition will depend on the project you choose meeting the United States Citizenship and Immigration Service’s (USCIS) requirements.
EB5 Due Diligence is the procedure of evaluating the EB5 visa project options prior to deciding to make an investment. Foreign investors face major decisions when choosing the right project that is most suitable for their investment objectives; an immigration lawyer can be beneficial when making this decision.
What Is an EB5 Direct Investment?
An EB5 direct investment is when the investments go directly into a start-up business, which then creates ten full-time jobs. Foreign investors directly invest their funds into the actual operation of their business.
Exceptions can be made to the new business rule when funds can be invested in an existing business that was created prior to November 29, 1990, if one of the following requirements is met:
- The business is reorganized or restructured, thus creating a new commercial enterprise with new investment goals.
- The business is expanding, resulting in an increase of no less than 40% in its net worth or number of employees.
It is important you do not choose a troubled business. You should discuss with your EB5 Visa lawyer if you should start a new commercial enterprise or fund an existing business.
The initial investment amount can vary based on a few circumstances. The minimum qualifying investment amount is $800,000 but could be as high as $1.05 million.
If foreign investors choose to open new businesses in targeted employment areas (TEA), the investment amount is the lower amount of $800,000. Targeted employment areas are defined as areas with an unemployment rate of 150% of the national average or are located in rural areas. Rural areas must have a population of less than 20,000 residents or are bordered by a municipality that has over 20,000 and must be outside a metropolitan statistical area (MSA).
There is an allotment of 20% of EB5 visa set-asides out of the entire yearly allotment of 10,000 EB visas.
The majority of EB5 direct investment in new business ventures includes investments such as restaurants, IT companies, franchise businesses, retail store chains, etc. Still, no matter the type of EB5 direct investment, the immigrant investors must meet the job creation requirement of ten full-time jobs.
If an investor wants to start a gas station, they must consider whether their new business would be able to create direct jobs and maintain and sustain ten full-time jobs or only several part-time jobs. Most gas stations are able to sustain 3-5 full-time jobs. The alternative would be to open multiple locations of the same business; then there is a possibility the investment could meet the ten full-time job creation requirement.
How Is a Regional Center Different From a Direct Investment?
There are two different investment options to obtain an EB5 visa: through EB5 direct investment or a Regional Center investment. There are distinct differences between the two visa options. The following explains the differences in these models.
Regional Center Investment Model
One of the primary purposes of an EB5 Regional Center is to promote economic growth through job creation and is a public or privately owned business. A Regional Center program acts as a sponsor or fund manager of a regional center project. The EB5 regional center is an investment management company that is involved in job creation, economic growth, raising capital for the EB5 development projects, and capital investment into the economy of the United States.
For a Regional Center to be approved, the business entity must apply for and be confirmed by the USCIS.
One main difference is that with a Regional Center, the ten-job requirement can be fulfilled with direct, indirect, or induced jobs.
The majority of EB5 investors choose to invest in Regional Center projects that are sponsored by Regional Centers because of the high potential of jobs. With this method, typically more jobs are available per investor, resulting in much lower immigration risk for the investors.
Direct Investment Model
Under this model, one or more investors would fully fund an EB5 project and are legally required to invest in a commercial enterprise that directly creates ten full-time jobs for a minimum of two years per investor. The commercial enterprise may be structured in several ways, including as a joint venture, limited liability company, sole proprietorship, and partnership.
Differences in EB5 Investor Filing Procedures for Regional Center And Direct EB5 Investments
Another important difference between a Regional Center investment and a direct investment is the process for how EB5 investors need to submit their immigration applications.
EB5 investors seeking to make direct investments can submit their applications independently with the assistance of an experienced and qualified immigration attorney. Direct EB5 investors are often responsible for compiling all needed supporting documentation for their new commercial enterprise investment.
EB5 investors that seek to make Regional Center investments are required to work with the Regional Centers to correctly prepare any needed project documentation for the investment they have selected. Regional center EB5 investors are not required to gather any project-specific documentation because that documentation has already been assembled and completed by the regional center.
For foreign nationals and their family, an EB5 visa application is a crucial step that needs careful consideration of the family’s situation. It is highly recommended that you speak with an EB5 consulting firm or a regional center approved by the USCIS when deciding the best avenue for obtaining a permanent green card for residency in the United States. Our immigration attorneys at EB-5 Global Investments solely offer immigration services to foreign nationals seeking permanent residency.
The Advantages of Direct Investments
There are many advantages of direct investments in their nature and structure that are not typically seen in Regional Center investments.
Direct investments are made through a permanent EB5 investor program, so they are not subject to any potential expiration dates. This benefit gives higher assurances of stability in the long term compared to Regional Center programs that have relied on short-term extensions.
Advantages for investors:
- Equity investments can offer much higher rates of return than Regional Center investments, which tend to be very low
- They do not face exit-timing difficulties that Regional Center investments do
- Redeployment into another project does not typically factor into direct investments
Advantages for the United States economy:
- Only direct payroll jobs will be counted
- Jobs are fully permanent and not just used on short-term projects
- Jobs that are offered can be highly skilled within innovative sectors
- With the focus being removed from real estate development, more businesses can benefit from EB5 capital
- Direct EB5 investments’ simple structure offers less chance for conflicts of interest, fraud, abuse, and offers more transparency.
An EB5 Visa Attorney Can Help
An experienced immigration lawyer can be an asset when trying to navigate all that is involved with EB5 visas. Our attorneys at EB5 Global Adventures are there for you throughout the process. We can help you decide which options are best and explain how they will affect your minimum investment.