Direct vs Indirect Investments

Prospective EB-5 immigrant investor visa petitioners may find themselves uncertain as to which type of EB-5 investment to invest through. In particular, whether the EB-5 immigrant investor should make a direct or a regional center EB-5 investment. Before making a final decision, EB-5 immigrant investors should consider some of the distinctions between a direct or regional center EB-5 investment.

EB-5 Direct Investment

  • The EB-5 immigrant investor controls his or her EB-5 investment funds.
  • The minimum investment is $1,000,000.00 unless the business is located in a Targeted Employment Area or Rural Area.
  • The EB-5 immigrant investor must research and identify an investment project that meets the standards and regulations of the EB-5 visa.
  • Before the EB-5 immigrant investor can file their I-526 petition, they must demonstrate that they have taken significant steps towards investing their EB-5 funds. In practice this means the EB-5 immigrant investor must spend part of their EB-5 investment funds before filing their I-526 petition.
  • The EB-5 immigrant investor must directly hire 10 full time employees for the new commercial enterprise within 24 months of I-526 approval.
  • The EB-5 immigrant investor must spend all their EB-5 investment funds within 24 months of I-526 approval.
  • Only direct jobs that are created or saved from the EB-5 immigrant investor’s investment can be counted and submitted to USCIS.
  • It is the responsibility of the EB-5 immigrant investor to document and maintain records on the 10 full-time jobs being created or saved by his or her EB-5 investment.
  • The EB-5 immigrant investor must be involved in the day-to-day management of the business. Therefore, the EB-5 immigrant investor would also be required to live in the area where the project is located.
  • The EB-5 immigrant investor must prepare the filing documents for the new commercial enterprise, such as, but not limited to the business plan, operating agreement, articles of association, and certificate of good standing.
  • It is the responsibility of the EB-5 immigrant investor to maintain expense records for the new commercial enterprise.
  • The EB-5 immigrant investor is responsible for an exit strategy for his or her EB-5 project or business venture.

Regional Center EB-5 Investment

  • The Regional Center controls the EB-5 immigrant investors’ investment funds.
  • The Regional Center researches and identifies an investment project that meets the standards and regulations of the EB-5 visa program.
  • Some regional center projects may have exemplar approval, which means USCIS has pre-approved the project for EB-5 investors.
  • Most Regional Center investments are located in a Targeted Employment Area, thereby reducing the minimum EB-5 investment threshold to $500,000.00.
  • The Regional Center provides the EB-5 immigrant investor with project documents including, but not limited to a Business Plan, a Project Financial Summary, Job Creation Study and Economic Impact Report, Private Placement Memorandum (PPM) and Subscription Agreement.
  • The Regional Center helps the EB-5 immigrant investor to comply with all of the regulatory and reporting requirements of the USCIS such as job creation auditing.
  • EB-5 immigrant investors are allowed to attribute indirect or induced job creation in their calculation of job creation for their EB-5 visa petition.
  • Regional Centers pool funds from multiple EB-5 immigrant investors which widens the scope of individual projects.
  • Since the Regional Center manages the EB-5 immigrant investors’ investment, the EB-5 immigrant investor may choose to live and work anywhere in the U.S., as the EB-5 immigrant investor is not encumbered with the day to day management responsibilities of owning and operating a business.
  • By utilizing an escrow account, the EB-5 immigrant investor does not have to fully commit their funds until their I-526 petition is approved, thereby minimizing their risk exposure.
  • If the petition is denied, the EB-5 immigrant investor can simply withdraw their EB-5 funds.