EB-5 Strategies: Direct Investment Or Regional Center Project?

The EB-5 visa program provides foreign investors with a potential pathway to permanent residence in the United States in exchange for their investment in a new or troubled commercial enterprise. Once investors have made up their minds regarding whether to invest in the U.S., they are faced with another important choice: should I invest in a regional center project, or invest my funds directly?

 

Originally, the regional center model of investment was enacted to encourage immigrant investment in a range of business and economic development opportunities within designated regional centers.[1]  While the regional center model may have been designed to help generate economic growth in rural areas and areas of high unemployment, it also offers many potential benefits to foreign investors who seek to gain U.S. residency through a passive form of investment.

 

The decision to seek EB-5 approval through investing in a regional center depends on the goals and present obligations of each individual investor. For those who currently maintain commercial ventures in their home countries and have business and personal obligations to attend to, investing through a regional center may be a more convenient option. As a limited partner, the foreign investor will be free to attend to other matters while the regional center manages the day-to-day operations of their investment. If, however, the foreign investor is eager to be involved in the new commercial enterprise and prefers a more “hands-on” approach to their investments, a direct investment is likely the better option.

 

In addition to the differences in management approaches, there other considerations EB-5 investors should take into account when deciding which form of investment better suits them. Take, for example, the requirement that the EB-5 investor’s new commercial enterprise create ten full-time positions for qualified U.S. workers. For a regional center investment, the EB-5 Program provides that the full-time positions can be created either directly or indirectly by the new commercial enterprise.[2] Indirect positions are those that were created collaterally or as a result of capital invested. Thus, the foreign investor need not prove they are directly employing ten qualified workers in a full-time capacity at the end of the two-year conditional residence period, but can instead benefit from the more relaxed requirements of indirect job creation and thereby rely on the regional center’s pre-approved economic methodologies.

 

For a vast majority of EB-5 investors, the Regional Center program has been the preferred path to obtaining U.S. residency. In fact, 92% of all EB-5 applications submitted to USCIS are for investors who are investing in regional center affiliated commercial enterprises.[3] Despite these trends, it is important for each potential EB-5 investor to weigh the pros and cons of each option with the help of an experienced immigration attorney in order to decide what best accommodates their individual needs.

it is important for potential investors to exercise caution and seek external advice when choosing which regional center project to entrust with their hard-earned investment funds.

 

[1] “EB-5 Adjudications Policy,” at 2. PM-602-0083: May 30, 2013

[2] 8 C.F.R. § 204.6((j)(4)(iii).

[3] “EB-5 Immigrant Investor Program Stakeholder Meeting Presentation,” at 3. USCIS: January 23, 2012, available at <http://www.uscis.gov/sites/default/files/USCIS/Outreach/Notes%20from%20Previous%20Engagements/Notes%20from%20Previous%20Engagements%20by%20Topic/January%20EB-5%20presentation%20FINAL.pdf>

 

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