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Investment Approaches For The EB-5 Visa

Investment Approaches for the EB-5 Visa

The EB-5 Program — also known as the Immigrant Investor Program — is a U.S. visa program that grants lawful permanent resident (LPR) status to foreign individuals. The program requires that a certain amount of capital be invested in a new commercial enterprise either through a government-approved regional center or individually as a direct investment.

The Basics Of Investing Through A Regional Center

It is also possible for foreign individuals to invest in an enterprise through a government-approved regional center. As with direct investments, the minimum investment is $500,000 if the regional center is located in a TEA and $1,000,000 if not. The majority of regional centers are located in TEAs. There is a requirement to create at least 10 full-time jobs within two years of visa petition approval, however, unlike the direct investment method, those who invest through regional centers can count both direct and indirect jobs towards the requirement. Indirect jobs are those that come about as a consequence of the regional center dispersing investment funds to affiliated new commercial enterprises. Additionally, since the government has pre-approved the regional center to help stimulate economic growth, individuals who invest through a regional center often don’t have to provide their own proof of establishing a new commercial enterprise or meeting job requirements, as this information is tracked by the center. Also, because most regional centers are also located in target employment areas, the lower investment requirement of $500,000 makes the option more accessible.

The Basics Of Direct Investments

With a direct investment, the foreign investor puts his money into the new enterprise directly with no intermediary. $1,000,000 is the minimum investment unless the enterprise is located in a TEA (targeted employment area). If the enterprise is within a TEA, the minimum investment is lowered to $500,000. One very important requirement that comes with the direct investment method is that investors must provide proof that the project will directly create at least ten qualifying full-time jobs within 24 months of their visa petition approval. Actual, identifiable jobs (W-2 employees) that are located within the enterprise receiving the investment are considered to be direct jobs. Other than meeting the job creation requirement, there are other legal requirements that govern all EB-5 investments (not just direct investments) which must be met. These include, among others, investor engagement in management of the enterprise, establishing the project as a “new commercial enterprise”, and the project’s location in a TEA, if applicable.

Picking The Best Investment Method

Even though the regional center method often carries less burdens, it may not be the most attractive option for every EB-5 investor. The direct investment option could be a better fit for those who want more project and operational control so they can open their own business or even expand one that already exists. In fact, obtaining permanent residency in the U.S. through a direct investment may just be an extra side-effect of an individual’s desire to open or expand a business in the United States. Also, because there is a higher success rate for business ventures in areas with better conditions economically, and most regional centers are located in TEAs, investors looking for maximum profit may prefer the options they find in direct investments. Greater control over the project can also make it easier to collect evidence needed to prove that legal requirements have been met, reducing the burden somewhat for direct investors. A strong business motivation, though, isn’t enough to make the direct investment option the best option. Other factors need to be considered. Most important of all, the investor must think about whether or not creating ten identifiable, qualifying, full-time jobs within the enterprise is feasible.

On the other hand, for investors who are less business-driven, the indirectness a regional center investment provides may be more attractive. Rather than spending their own resources, regional center investors can make use of government-approved economic units that are already established. Also, in addition to a lighter burden when it comes to collecting evidence to serve as proof of meeting requirements, regional center investors are often not so tightly tied to the enterprise as are their direct investment counterparts, giving them more freedom of movement inside and outside of the U.S. Those who invest through a regional center or intermediary should not, however, forget the importance of due diligence. Those who are interested in investing through regional centers should consider qualifications of both the center and its affiliated enterprises. Government approval status, experience with investments, job creation success, financial outlook and visa petition approval rates are all things that should be taken into account.

Before Deciding On Any EB-5 Investments

To find the best investment method to fit their individual situation, all foreign individuals interested in the EB-5 program should consult with a qualified immigration attorney. It’s important to ask questions regarding issues mentioned in the paragraphs above as well as others that may pertain to a particular situation. All relevant information must be taken into account when deciding on the right investment method and the general suitability of the EB-5 program itself.

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