EB-5 funds can be applied to any part of a project. By itself, however, the purchase of land is unlikely to be considered as an EB-5 expenditure. Therefore, in terms of job creation, land purchases do not provide any direct benefit to EB-5 investors. That said, the key requirement for an EB-5 project is that its spending—excluding the cost of land and other ineligible expenses—creates at least 10 jobs per investor.
One of the most important objectives of the EB-5 investment program is to stimulate the U.S. economy by generating employment. To that end, foreign nationals are given the option of investing in targeted employment area (TEA) projects. TEAs are either rural or high-unemployment areas that will benefit greatly from EB-5 investment capital. Investors who choose EB-5 projects located in TEAs are entitled to invest at the lower minimum amount of $900,000 (the minimum investment amount for projects outside TEAs is $1,800,000).
Even though every EB-5 investment must generate at least 10 jobs, employment creation is calculated very differently for direct and regional center projects. Direct EB-5 investors can only count jobs that were directly created by their projects, whereas regional center investors can also count induced and indirect employment. Indirect and induced jobs are generated by the EB-5 project’s expenditures and its employees’ spending in the community.
Due to their flexible job calculation method, regional center projects are more likely to offer investors ample job cushions and create many more than 10 jobs per investor. Before committing to an EB-5 investment opportunity, foreign nationals should carefully examine all of their options and make sure that the project is sure to be completed. Doing so will reduce their financial and immigration risk.
EB-5 project developers should also keep in mind that all of their employees must have permission to work in the United States. United States Citizenship and Immigration Services (USCIS) defines a qualifying employee as “a U.S. citizen, a lawfully admitted permanent resident, or other immigrant lawfully authorized for employment in the United States.” Moreover, the EB-5 investor and any immediate family members do not count as qualifying employees.
