There is a myth that occasionally surfaces about the EB-5 Immigrant Investor Program that purports that the program is a way for people to essentially buy permanent residency in the United States.
That claim is false. Every project creates real employment opportunities, often in the geographical areas that need them the most. Moreover, they offer lasting economic benefits to the local communities in which they are completed.
Although the primary goal for foreign investors who participate in the EB-5 program is to secure U.S. green cards for themselves and their immediate family members, just as with any other investment opportunity, another important goal is a healthy return on their investment.
Because of this, selecting the right EB-5 visa project is an imperative and often time-consuming aspect of the EB-5 process. This article details more about what it means to perform “due diligence” during EB-5 visa project selection. To begin, here are some types of EB-5 projects you can expect to see across the United States.
Common Categories for EB-5 Visa Projects
While EB-5 visa projects can take on any number of forms, there are a handful of common project types proven to garner approval through the offices of United States Citizenship and Immigration Services (USCIS):
- Agricultural developments, including wineries and farms
- Biotech and medical technologies
- Casinos
- Convention centers
- Electric vehicles
- Entertainment venues
- Hotels
- Mixed-use retail
- Manufacturing
- Office buildings
- Restaurants
- Sports stadiums
For investors with a specific type of project in mind or a certain geographical region of interest, EB5 Affiliate Network has a list of past and presently available projects to help begin the vetting process. With one click, prospective EB-5 investors can get project highlights, construction progress photos, architectural renderings, and more. Reviewing these opportunities is a great place to start, but it is only the tip of the iceberg when it comes to performing due diligence for actual EB-5 investment.
Important Considerations for Initial EB-5 Visa Project Selection
When deciding whether to invest in an EB-5 visa project, there are three important considerations every immigrant investor should make at the beginning of project evaluation:
Will the EB-5 visa project meet the investment goals of the investor in terms of ROI (return on investment)? Answering this question should include both basic and rigorous analysis tasks against both the regional centers and developers of interest. An EB-5 investor should determine not only whether there is an expected ROI on a given EB-5 project but also what that return will be. Investment amounts have substantially increased since the program’s inception, which has made ROI — or the redeployment of initial capital at a minimum — even more important.
How long will it take for the investor to see an expected return on investment on their EB-5 project? A careful study of capital return policies and other conditions a regional center implements will go a long way toward helping an investor decide whether a given EB-5 visa project aligns with their investment goals. Additionally, the adjudication process has also lengthened quite a bit since the 1990s. Expected processing timelines can also help investors decide which direction to go with their investments.
Will the project meet the basic EB-5 program requirements for their visas to ultimately be granted? Investors need to understand whether an EB-5 visa project of interest will, in fact, a) create at least 10 full-time jobs for U.S. workers and b) maintain those employment positions for at least two years to receive permanent resident status in the United States.
Compiling the Necessary Supporting Evidence for an EB-5 Visa Project
Another integral part of due diligence in project selection is to ensure the investor will be able to gather the appropriate supporting evidence once they select an EB-5 visa project. Understanding what is needed to gain approval for an EB-5 application can help weed out investment opportunities that may present obstacles the investor isn’t interested in dealing with.
The initial immigration petition an EB-5 immigrant investor must submit to USCIS is Form I-526. With that petition, there are a number of types of supporting evidence the investor needs to include to give them the best chance at project approval.
Supporting evidence must cover such application elements as a new commercial enterprise (NCE), the management of this enterprise, the actual investment in the enterprise and its associated EB-5 visa project, and the job creation necessary to meet the EB-5 program requirements (or job preservation, when a project concerns a troubled business).
Below is a summary of the specific types of evidence you will need to provide on any project you may consider investing in.
Evidence of a New Commercial Enterprise (NCE)
Documents should reflect the active investment of capital in a for-profit business that qualifies as a new commercial enterprise established after November 29, 1990, OR one that was either purchased or expanded on or before November 29, 1990. When seeking eligibility at a reduced investment amount, you must also provide documentation of the designated targeted employment area (TEA) where the project takes place.
Documentation Supporting the Active Management of an EB-5 NCE
One requirement for participation in the EB-5 program is that the immigrant investor remains engaged in the management of the new commercial enterprise involved. There are two ways an EB-5 petitioner can do this. Either the investor chooses to a) directly control the day-to-day of the business or b) participate in the policy formulation that will affect the business. Supporting evidence must reflect which option the investor elects.
Investment Documents Proving Active Investment of Lawfully Obtained Funds
Documents that prove an active investment are often as simple as capital transfer documents and receipts but can be as complex as documentation that can also double as proof of lawfully obtained funds. Source-of-funds evidence can include things like the following:
- Business registration documents
- Personal and corporate entity tax returns
- Loan documents from a financial institution
- Letters supporting the gift of EB-5 capital
- Copies of relevant governmental admin proceedings
Depending on how an investor has obtained funding for an EB-5 visa project, it is advisable to consult an experienced EB-5 immigration attorney. Doing so can save an investor a substantial amount of time and energy on the appropriate selection of a project and the gathering of the required evidence for sourcing funds.
Evidence of Job Creation and/or Preservation
In an EB-5 visa project scenario that involves a new commercial enterprise, evidence of job creation typically includes a comprehensive business plan that outlines the need for 10 or more new employees, usually due to the size and nature of the proposed project. Ten new jobs will satisfy the job creation requirement for the EB-5 program.
When an investor chooses to support a qualifying troubled business, that business should be able to provide the investor with copies of tax records and employment eligibility verification documents, along with a business plan that reflects how 10+ existing jobs will be maintained for no less than two years.
Once an EB-5 immigrant investor has performed these steps in their due diligence and is confident they can meet both their personal goals as well as satisfy the EB-5 program requirements, they are ready to finalize their EB-5 visa project selection.
Written on behalf of Sam Silverman of EB5AN: Sam has extensive real estate development, management, financing, and brokerage experience in Florida, Pennsylvania, California, Georgia, and internationally in the People’s Republic of China.
Prior to EB5AN, Sam served as the director of corporate strategy and expansion for professional golfer Jack Nicklaus in the People’s Republic of China, living full time in Beijing. Sam was also previously employed by the Boston Consulting Group, one of the top management consulting and business strategy firms in the world, where he worked directly with Fortune 500 companies in the food service, media, manufacturing, hospitality, and real estate spaces in the U.S., Europe, and Middle East. Sam is also a Forbes 30 Under 30 National Winner for Social Entrepreneurship. Sam holds a B.A.
Economics with a concentration in Mandarin Chinese from Yale University, a Certificate in Financial Accounting from the London School of Economics and Political Science, and an M.B.A. from the Stanford Graduate School of Business.
