How much am I required to invest in order to participate in the EB-5 Immigrant Investor Program?
The investment is comprised of two components: the qualifying investment in the project itself and the administrative fee. At the present time, the qualifying investment is a minimum of either five hundred thousand dollars ($500,000) or one million dollars ($1,000,000) depending on where the project is located. If the project is located in a Targeted Employment Area, or TEA, the requirement is the lesser amount. The administrative fee varies and is typically applied toward the marketing and administrative costs associated with the offering. It typically ranges between forty thousand and sixty thousand dollars.
How do I know if a project is located in a TEA?
In order for the lower qualifying investment threshold to apply the project must be located in an area that meets the definition of a high unemployment area or a rural area, as defined by the USCIS. This includes an area whose unemployment rate is at least one hundred fifty percent (150%) of the national average unemployment rate, or a city or town with a population of less than twenty thousand people and that is not located within a Metropolitan Statistical Area. The offering must contain a letter from the appropriate agency, typically from the state in which the project is located, that designates that the project is located in a TEA.
What assistance will I need in order to participate in the EB-5 program?
Investment under the EB-5 program involves a range of legal, regulatory and financial issues that should be carefully considered before participating. Many investors will utilize a financial consultant and employ an immigration attorney to assist in the completion of documents for submission at various stages of the process. It is important to fully understand the procedures involved and it is strongly recommended that expert advice be obtained prior to making any investment.
What level of involvement is required in connection with the project?
The structure of the investment is such that there is limited involvement by the immigrant investor. The investment is in a New Commercial Enterprise that is structured as a Limited Partnership (or Limited Liability Company) and as such the partners (or members) meet the requirements of the EB-5 program without having to be involved in the daily management of the project. The investors have the rights and obligations described in the Partnership Agreement (or Operating Agreement) which may be reviewed as part of the offering.
Who is entitled to US residency as a result of an investment under the EB-5 program?
As a result of a qualifying investment under the EB-5 program, the immigrant investor, his/her spouse and any unmarried children under the age of twenty-one (21) are entitled to become residents of the United States, so long as all requirements are met including the creation of at least ten (10) jobs as a result of the investment (or the saving of this amount of jobs that may otherwise be lost in a troubled business).
Why should I use a regional center to raise EB-5 capital?
The primary advantage to fund-raising through a regional center is that both direct and indirect jobs may be counted when determining the amount of jobs that are created by a project. This is of particular benefit in construction projects which account for the majority of EB-5 capital investment. The ability to include indirect jobs in the calculation of those resulting from a project may significantly increase the number of investors that may subscribe to an offering.
Are there other advantages to working with a regional center to raise EB-5 capital?
The EB-5 fund-raising process is highly structured and involves a significant degree of regulatory oversight. An experienced regional center is able to ensure that the necessary steps are taken and proper documents are prepared by qualified experts to help facilitate the review and approval process. Industry connections, such as immigration attorneys, securities attorneys, banks and investment brokers, help regional centers maximize the effectiveness of the offering and the overall capital raise.
When will the money that is raised be available to me?
While the time frame for securing USCIS approval of the investor’s subscription to the offering is often significant, there are ways to enable the developer to obtain access to the capital prior to the approval event. Often times an early release provision is included in the offering documents enabling the bank to advance a portion of the investment proceeds to the developer while the USCIS decision is pending. Due to these time constraints, developers are often required to take out bridge loans that are paid down when the EB-5 capital becomes available.
Is there a limit to the amount of money that I may raise using EB-5 funding?
There is no dollar limit to the amount of money that you may raise in an offering, either in terms of the total amount raised or the percentage that the EB-5 capital represents of the overall capital stack. However, for each investor at least ten (10) new jobs must be created as a result of the project. Therefore, the size of the project – in terms of the indirect jobs created during its development and the direct jobs upon its completion – is the key indicator of the amount of capital that may be raised through EB-5.
What form does the EB-5 capital investment take?
Under the regional center model, the EB-5 investment is made in a New Commercial Enterprise that in turn will either loan money to the project developer (also known as the Job Creating Entity) or take an equity position in the project. In either case the developer has access to the funds at such time and for such purposes as are described in the offering.