EB5 is an immigration provision law in the United States that allows wealthy immigrants to earn a US green card quickly by making a financial investment of $1 million or $900,000 and their investment will create 10 (or more) permanent jobs. The purpose of this economic stimulation program is to create new jobs and benefit the community as a whole. Also, real estate developers can also finance new projects through this investment that are usually difficult to obtain.
If you’re a US immigrant and you want to take advantage of the EB5 program to get your US green card, then you also have to learn more about EB5 financing. And if you want to know more about this topic, then we recommend you to continue reading as we will talk about the things you know about the EB5 program and how does EB5 financing work.
The EB5 program, or also known as the Immigrant Investor Program is established by the US Congress in 1990 to stimulate the economy of the country by encouraging immigrants to invest in exchange for a US green card.
And later on, the provision of the program was expanded so that different investors can invest in 1 project provided they all meet the necessary requirements to obtain an EB5 visa and US green card. For example, if there’s a $90 million hotel project that can create 80 direct jobs and 300 indirect jobs, then it can accept 8 potential EB5 investors to raise the capital and the rest will be shouldered by the EB5 regional center.
On the other hand, the investor can also directly invest on a single project without the involvement of the regional center.
How Does It Work?
How the EB5 investment works will actually depend if the potential investor will invest directly or through a Regional Center model.
Direct Investment Model– The potential EB5 investor may invest on an independent project and take hold of an equity position in his/her project. And through this process, the investor is required to accomplish the minimum requirements as stated in the immigration provision law to secure his/her US green card.
Since this project is financed solely by the investor, then he/she may hire the services of an EB5 financial advisor for a trusted guide on this process.
Regional Center Program Model – The potential EB5 investor must invest in equity with a limited partnership as created by an EB5 regional center. One important thing to remember though, the investor is required placing their money without any guarantee that their investment will be repaid later on.
The regional center will facilitate the EB5 loan to the project. Hence the investor is no longer required to apply for an EB5 loan.
Why Choose One Investment Model Over The Other?
Choosing the regional center model can be beneficial in the sense that it provides EB5 investors less risk since they already have a clear idea of how their investment will go and if they are going to receive repayment of their EB5 loan.
On the other hand, investing directly to an independent EB5 project is riskier since they have to depend more on the current market conditions. However, if the investor feels confident on the project he/she is about to invest in then they can go ahead and choose the direct investment model.
In addition, any interest paid on the EB5 project from the regional center is fairly low, while the ROI (return of investment) for any direct investment model will be rewarding, especially if the market is doing well.
Due Diligence For Potential EB5 Investors
Although investors of EB5 projects come from various backgrounds, they are all recommended to conduct due diligence to have informed knowledge about the project and ensure their investments are well worth it. And this is especially true if they are going to choose investing through the regional center program option.
Obviously, investors have 2 main concerns with their EB5 investment: if the EB5 project investment will guarantee their permanent resident status in the United States and if the EB5 project will yield ROI.
And conducting due diligence confirms the viability of the project to be invested within a particular regional center.
Below are some of the key questions every EB5 investor should ask when examining or evaluating a regional center to invest in:
- Is the EB5 regional center able to facilitate successful visa petitions in the past?
- How long is this regional center been operating?
- Are their projects approved by USCIS (United States Citizenship and Immigration Services)?
- Is the chosen EB5 project able to support the required number of full-time jobs needed for the investor to secure their US green card?
- Does the EB5 regional center provide a redeployment plan?
Consulting With A Qualified EB5 Practitioner
Investors can benefit more when working with EB5 practitioners who are experienced in the EB5 program requirements. Also, a qualified financial advisor can help EB5 investors from being suspected of misinterpretation or fraud which can result in rejection of their visa application. And aside from providing informed advice to investors, these professionals are also able to guide investors in negotiating more favorable loan & repayment arrangements. Similarly, financial advisors provide investors the ability to make educated EB5 investment decisions and increase the investor’s chance of being successful with his/her visa petition.
Truly, their services play a crucial role in guiding and allow potential investors to invest with confidence. So investors are recommended to get an expert advice from a fellow EB5 investor.
EB5 Resources is a full-service concierge, advisor, and consultancy specializing exclusively in EB5 investments. They can help you navigate the complicated terrain of EB5 investment, petition, and visa processing while avoiding common pitfalls that could lead to delays, denials, or even the loss of your investment.