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Avoiding RFEs with Proactive EB-5 Business Plans

When a United States Citizenship and Immigration Services (USCIS) adjudicator believes a visa application lacks sufficient information to justify an approval, he or she may issue the candidate a Request for Evidence (RFE) to ask for further detail on any aspect of the application. For investors and regional centers working within the EB-5 Program, these requests often focus on the business plan element of the application and can significantly delay the final approval as well as any funding contingent on the issuance of an EB-5 visa.

This article discusses common reasons for RFEs and outlines strategies investors and regional centers can use to more effectively structure their business plans and avoid raising questions as to their businesses’ economic or legal legitimacy. While USCIS adjudicators are responsible for ensuring that a visa application meets all the requirements of the EB-5 Program, they are not experts in every industry, and it therefore falls upon the investor or regional center to provide a comprehensive explanation of the investment project that allows the adjudicator to efficiently find the information he or she needs to make a decision on the matter of the EB-5 visa.

The following three strategies can be used proactively to prevent the need for an RFE.

(1) Consult with experienced EB-5 professionals 

The EB-5 application process is complex, meaning investors will benefit from working with regional centers and immigration attorneys experienced in creating successful EB-5 business plans and economic impact reports. These professionals will have a good understanding of the subtleties of the EB-5 Program and will know which points are of interest to a USCIS adjudicator as well as how to present the necessary information logically and clearly.

(2) Structure the EB-5 business plan effectively 

The business plan should provide enough detail that the adjudicator will be able to find answers to any questions regarding the economic and job creation prospects of the business as well as the legitimacy of the investment funds. If an adjudicator is unable to easily find the answers to his or her questions or if necessary information is missing entirely, the investor will be issued an RFE and may be required to completely restructure the business plan to address multiple deficiencies. This is often the case for applicants’ whose business plans lack detail in several respects or raise significant concerns for USCIS regarding particular facets of the application, for example, the source of the EB-5 investment funds.

Below are some key tips for creating an effective business plan.

Use Matter of Ho as a reference.

The ruling in the Matter of Ho case, which concerned the RFE issued for an EB-5 petition in 1998, provides an outline for all components necessary in an EB-5 business plan. This can serve as an excellent starting point for business plan creation, but investors should keep in mind that several recommendations have been issued since Matter of Ho to further clarify the standards by which USCIS evaluates applications. Working with experienced regional centers and attorneys will allow investors to draw on a wealth of knowledge to ensure all necessary elements of the business plan are addressed.

Avoid contentious practices.

The job creation and economic impact prospects of a project are key elements of its legitimacy as an EB-5 investment target. Because of this, investors must be able to clearly present economic projections and job creation targets, both direct and indirect. While proving the creation of direct jobs is fairly straightforward, some projects rely on indirect jobs, such as those created by tenants of a real estate development, to meet their EB-5 targets. Some projects may also attempt to incorporate guest expenditures, as in a hotel, into the economic impact of the project. These figures are difficult to substantiate and may call the project’s prospects into question, so investors should avoid these practices if possible to ensure a smooth application.

Give summaries as well as details.

A detailed application will lessen the chances of an RFE, as adjudicators should be able to find all relevant information within the submitted business plan. However, investors should also include summaries where necessary to point out any key details for reference by the adjudicator. A good organizational structure and logical use of headings and subheadings will allow an adjudicator to quickly and easily find any information necessary.

(3) Provide comprehensive justification (third-party data/evidence) for all financial projections

Any financial projections given in the business plan, as for revenue and expenses, should be supported thoroughly with relevant research and data. The following strategies used alone or in combination can help an investor or regional center make a convincing case for the prospects of a business venture.

Commission an independent analysis.

Feasibility studies and other analyses from unbiased third parties can prove invaluable in justifying financial projections, as they examine the target market, including supply and demand, as well as any competition. Such studies, when conducted by professionals with proven industry experience, will present their own opinions on the feasibility of businesses and will provide sufficient detail to answer an adjudicator’s questions.

Refer to historical performance and industry benchmarks.

Business plans focusing on subsidiaries or expansions of existing entities may be able to refer to historical performance as a benchmark for financial projections. In such cases, any differences between the new venture and the existing business should be explained and any similarities highlighted to justify the use of historical data, and all figures should be backed up by relevant financial statements.

Similarly, some businesses may be able to rely on the existence of standards established by independent associations or consultants to justify their projected costs and expenses. Investors should keep in mind, however, that new businesses may not necessarily be able to meet standards for established ones, so financial projections should be adjusted accordingly with explanations.

Use team members’ industry experience.

Regional centers often recruit teams experienced in their respective industries to ensure that an investment project runs smoothly. While USCIS generally considers members of the investment team and the business in question to be biased because they aim, as employees of the business, to make a strong case for its financial prospects, team knowledge and industry experience can prove a vital resource when gathering data to justify financial projections. If citing team expertise in the business plan, investors should take care to detail those team members’ industry backgrounds to legitimize their points.

The strategies above are meant to provide a foundation upon which investors, working with regional centers and knowledgeable immigration attorneys, can create effective business plans to support their EB-5 applications. While USCIS adjudicators will issue RFEs in cases where business plans lack detail or raise questions as to the prospects of an investment venture, investors can proactively address these concerns by referring to industry standards and existing USCIS recommendations as well as consulting with professional third parties to create comprehensive business plans.