Since its creation in 1990, the EB-5 Visa Program has seen tens of thousands of foreign nationals apply for U.S. permanent resident status, with billions of dollars of capital deployed into job-creating enterprises.

EB-5 capital is a great source of funding for certain development projects. However, getting your project approved for the immigrant investor program isn’t simple.

You must meticulously prepare the right documentation, structure your project, and create an effective marketing plan. Developing comprehensive and compliant economic, business, and legal documentation is a critical step that is often underestimated by EB-5 applicants and project sponsors.

This article helps you understand the EB-5 process, including how EB-5 capital works. It summarizes the EB-5 visa investment process, the main parties involved, and some common mistakes you should avoid making.

Main Parties Involved in the EB-5 Capital Process

There are four main parties involved in generating EB-5 capital:

🏢 A USCIS-approved regional center

Regional centers are organizations set up to use EB-5 capital to stimulate an area’s economy. United States Citizenship and Immigration Services (USCIS) designation is required for a regional center to raise EB-5 capital. Each EB-5 investment needs to create 10 full-time jobs for the investor to qualify for a Green Card. The regional center is responsible for managing investor EB-5 capital, as well as calculating and recording job creation.

The majority of EB-5 projects are funded through USCIS-designated regional centers, as opposed to direct investments. This is because projects sponsored by a regional center can count jobs created both directly and indirectly by the project’s overall economic impact. This means that the number of jobs created will be derived from factors like:

• Cost expenditure
• Project revenue
• The direct employment of workers (W-2 jobs)

This indirect investment method reduces investor risk and makes the project more scalable.

💼 New commercial enterprise (NCE)

This is the entity in which the EB-5 investors make their capital investments. Typically, this is a newly formed partnership. Each investor subscribes as a limited partner, and the project sponsor acts as the managing general partner.

🏗️ Job-creating entity (JCE)

This is the entity that will carry out the project development and create the required minimum of 10 jobs per EB-5 investor.

👩🏾‍💼 EB-5 investor

This is a foreign national investor who is seeking to gain permanent residency in the U.S. To do so, they must invest in a USCIS-approved EB-5 project and submit an EB-5 visa application.

The minimum investment is $800,000. This needs to be invested for at least two years. To qualify as an EB-5 project, the investment must create at least 10 jobs that last at least two years, and be at risk for this duration.

The investors all receive temporary Green Cards. Once each investment has created 10 jobs and has been at risk for at least two years, the investor can apply for a permanent Green Card using Form I-829.

Required Paperwork for the New Commercial Enterprise and Job Creating Enterprise

After an NCE is formed, it typically oversees a private offshore securities offering with a private placement memorandum (PPM) detailing the EB-5 project investment terms. EB-5 investors subscribe as limited partners by signing a subscription agreement.

Once funded with EB-5 investor capital, the NCE makes an investment (debt or equity, depending on the project structure) into the JCE through which the required 10 jobs per investor are created. The NCE and JCE are each required to submit several documents to USCIS as part of an EB-5 investor’s application.

NCE documents

The NCE is required to submit:

1. A USCIS letter of regional center approval designation
2. A detailed USCIS Matter of Ho-compliant business plan
3. An economic/job creation analysis showing how the required number of jobs will be created
4. Legal offering documents, including:

• A PPM
• Articles of entity formation and certificates of good standing
• A partnership agreement
• A subscription agreement
• An escrow agreement with capital release terms
• An investment/loan agreement between the NCE and JCE
• A collateral agreement for the investment/loan
• Additional supporting documentation

If the project is located within a targeted employment area (TEA) then investors will qualify for a lower investment amount of $800,000 and not the usual $1.05 million. The NCE must send verifiable, third-party evidence and data showing that a project is in one of these areas.

JCE Documents

The JCE is required to submit:

1. A title deed (if the investment is a real estate transaction)
2. A credible and recent market analysis or feasibility study
3. A bank loan commitment
4. An as-built, third-party appraisal
5. Proof of the developer’s capital commitment to the project
6. Proof of any other capital or lending instruments to be used in the transaction
7. Information on the project developer’s track record
8. An exit strategy for the investment (loan repayment, refinancing, sale, etc.)

Step-by-Step Process for Documenting an EB-5 Project

As noted above, each EB-5 project is different, and no universal solution fits all economic development projects. However, the procedure for assembling a comprehensive and USCIS-compliant set of documents for any EB-5 project is essentially the same.

Step 1: Determine TEA qualification

Areas that are rural or have high unemployment are classified as TEAs. Projects located in TEAs benefit from:

• A lower required minimum foreign investment of $800,000, instead of $1,050,000 outside of a TEA
• Set-aside visas, meaning investor visa applications are less likely to get caught in a backlog
• Faster USCIS visa application processing

The primary motivation of most EB-5 investors is to receive U.S. Green Cards—not necessarily to achieve a high return on their investment. Because of this, the majority of investors prefer to select a project located within a TEA.

Step 2: Determine job creation

The primary aim of the EB-5 immigrant investor program is to provide economic growth in the form of new job creation. Therefore, the next step in the process is to determine the job creation potential of an investment project. As mentioned earlier, those who invest in an EB-5 project via a regional center can count direct, indirect, and induced jobs toward their job creation total.

For real estate projects, the developer provides the EB-5 project sponsor with a detailed cost and revenue pro forma. The EB-5 economist then determines the number of jobs that USCIS will attribute to the development of the project.

Step 3: Determine the target EB-5 capital to raise

Once the total number of potential jobs has been determined, that number can be divided by 10 and multiplied by $800,000 or $1,050,000, depending on whether the project is located in a TEA. For example, if a project creates 180 jobs, the project can support a maximum of 18 foreign investors. If the project is located in a TEA, each investor must invest $800,000, adding up to $14.4 million in EB-5 capital investment.

Many investment projects do not cost exactly the amount initially budgeted or generate exactly the amount of anticipated revenue. Because of this, building a job cushion into the EB-5 project job calculations is important.

Creating such a cushion ensures all EB-5 investors receive their permanent Green Cards, even if the development of the project costs less than anticipated or generates slightly less revenue. EB-5 investors’ main aim is to demonstrate they have met job creation requirements so they can receive their permanent Green Cards.

If the project created less than the required number of jobs per investor, some of the foreign investors may not be able to lift conditions on their temporary Green Cards. Therefore, EB-5 projects should have a job cushion of at least 20%.

There is no restriction on the size of the job cushion a project has. A large project with a small percentage of EB-5 capital could have a job cushion exceeding 300%, which significantly reduces the immigration risk for any EB-5 investors, since the project would have to go terribly wrong for the required number of jobs not to be reached.

Step 4: Finalize project documentation and open project escrow account

Once the EB-5 project is fully documented, the project sponsor is responsible for reviewing and approving the final set of investment documents that will be filed by EB-5 investors. After this documentation has been finalized, the project sponsor will work with a major U.S. bank to set up an EB-5 project escrow account for the NCE. EB-5 investors wire their investment funds to this account when they subscribe to the investment offering.

Step 5: Marketing the EB-5 project to foreign investors

Once the escrow account has been opened, the NCE can begin to subscribe investors to the EB-5 project offering. At this point, the project sponsor has several options for marketing the project to EB-5 investors:

1. Engage in direct marketing to investors overseas
2. Hire a registered U.S. broker-dealer to manage the EB-5 capital raised
3. Work with foreign immigration/migration firms in China and other countries that specialize in placing investors in EB-5 projects

Most EB-5 projects are presented and sold to investors in informational seminars. It is important to develop a detailed set of attractive marketing materials (brochures, videos, or executive summaries) and have them translated into an investor’s local language. Typically, a representative of the NCE will attend these seminars to present the EB-5 project, speak with investors, and answer questions.

Every individual marketing an EB-5 project domestically or abroad must register with USCIS.

Step 6: Subscribing EB-5 investors

Once a new investor decides to invest in a specific EB-5 project, they will typically sign the project’s subscription agreement and wire a deposit to the NCE project’s escrow account. Then, the EB-5 investor works closely with an immigration attorney to prepare their I-526 investment petition, complete with legal source of funds documentation.

Step 7: Release of EB-5 capital from project escrow account

Each EB-5 project has a unique escrow release structure, which determines when the investors’ EB-5 capital will be available to the NCE to invest in the JCE. Some EB-5 project sponsors choose to have investor capital released from escrow and available for investment upon submission of the investors’ I-526 immigration petitions to the USCIS.

Other EB-5 project sponsors are more conservative and choose to have capital released from escrow upon the approval of each individual EB-5 investor. This more conservative structure provides investors with confidence that USCIS will approve their application for a temporary Green Card before their capital investment enters the EB-5 project.

Common Mistakes to Avoid

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EB5AN is a regional center sponsor and provides EB-5 consultancy. Here are some of the common mistakes we see project sponsors make when reviewing EB-5 project documentation and assembling the full package of documentation for an EB-5 project:

Inconsistencies across documents within the EB-5 project documentation package

One common mistake is that job creation numbers, projected revenues, and development costs don’t stay consistent across the business plan, PPM, and other supporting documentation. This is a critical mistake, because USCIS will not approve an investor’s EB-5 application if their project documents are inconsistent.

These types of errors are common when several vendors (attorneys, economists, business plan writers, etc.) assemble the EB-5 documentation. We recommend working with a single company to complete the EB-5 project documentation and minimize these types of critical errors.

Failure to consider the marketability of the EB-5 project under current market conditions

EB-5 projects must be designed and constructed with the EB-5 investor marketplace in mind from the beginning. Since there are more projects on the market than there are investors, designing a project with a structure and a job cushion that will be attractive to investors today is vital.

Having a current knowledge of attractive project structures, capital security, loan terms, escrow release terms, and investment returns is critical for devising an EB-5 project that will appeal to potential investors.

Attempting to cut costs by engaging unqualified EB-5 vendors

Many vendors and attorneys will claim to be able to provide the required documentation for an EB-5 project. Perform due diligence and speak with multiple vendors to determine which EB-5 team will most effectively structure your project and bring it to market under a USCIS-approved regional center. Inquire about refund guarantees and ask about the types and number of EB-5 projects the team has been involved with.

Conclusion and Important Takeaways

Deciding to seek EB-5 capital is a significant business decision that should be carefully evaluated according to the size of the project, potential job creation, and EB-5 capital needed. Such a decision should also consider the amount of effort, cost, and planning required on the project sponsor’s behalf to assemble a successful EB-5 project.

Project sponsors must be patient, but the rewards for long-term thinking can be significant. A successful EB-5 project will provide the project developer with valuable, below-market-rate capital investment debt/equity and will directly result in new job creation that stimulates the project’s local economy.

If you want help gaining EB-5 funding for your project, contact EB5AN today. You can also look at projects we have recently partnered with.

Find out if your project qualifies for TEA designation

Search for regional center coverage in your area

Learn how to rent a regional center

Learn what makes a good EB-5 project