The EB-5 Immigrant Investor Program offers a unique way for foreign investors to secure U.S. permanent residency while promoting economic growth.
At the heart of this program are EB-5 regional centers, which are essential for channeling foreign capital into a job-creating entity. However, establishing and managing a regional center can be a complex journey that requires a sound strategy and navigating legal, financial, and compliance matters.
In this article, we explore the intricacies of creating and running a regional center, including USCIS regulations, due diligence on projects and investors, and steps needed to ensure it gains United States Citizenship and Immigration Services (USCIS) approval to operate.
What Is an EB-5 Regional Center?
An EB-5 Regional Center is a type of entity in the United States that promotes foreign investment through the Immigrant Investor Program. This program allows eligible foreign nationals and their families to obtain U.S. green cards by investing a specific amount in job-creating projects.
Regional centers are typically approved by United States Citizenship and Immigration Services (USCIS) and focus on pooling capital from multiple EB-5 investors to finance qualifying projects. These projects include real estate developments, infrastructure, or businesses.
A regional center must also promote economic growth through job creation, regional production, export sales, and EB-5 investments. These centers play a crucial role in connecting investors with suitable projects and managing the complex immigration process.
USCIS does not require any particular license to create and apply for EB-5 regional center status. To become a USCIS-approved regional center, a business or organization must complete and submit Form I-956, Application for Regional Center Designation.
You also need to collect and submit any necessary supporting documentation to prove your eligibility. We’ll discuss this in more detail a bit later on.
What does it cost to file the documents required to create an EB-5 regional center project?
There are a number of fees associated with creating an EB-5 regional center. One of the first fees you’ll need to pay is your Form I-956 filing fee of $17,795.
However, the overall cost to gain approval for regional center projects once a regional center has been designated as such by USCIS, may increase depending on additional documentation requirements and how they are met.
For example, a business might need to hire professionals to prepare the required comprehensive business plan and the necessary economic impact report.
Advantages of EB-5 Regional Center Status
There are a number of benefits to creating and running new or existing regional centers, including:
- Inexpensive capital: USCIS-approved regional centers provide cost-effective means for businesses to raise capital. This makes it more accessible for investors and increases the likelihood of foreign nationals investing through regional centers.
- Access to multiple investors: Regional centers allow for collaboration between multiple EB-5 investors in a single project with access to capital sources.
- Flexible job creation calculation: Through regional centers, EB-5 projects can more easily fulfill job creation requirements with direct and indirect job positions, unlike a direct investment which requires 10 full-time positions to be created per EB-5 investor.
- Renting regional centers: Some businesses opt to lease regional centers for project funding, which can be a quicker and less expensive alternative to establishing their own regional centers.
- Ownership of regional centers: For those with the time and resources, owning and operating a regional center can offer more control over the EB-5 investment process.
- Customized approach: When setting up your regional center, you’ll have a choice between renting or owning an entity. This allows for a customized approach that suits your specific business and financial needs.
Key Point: What Are the Job-Creation Requirements for EB-5 Regional Centers?
The job-creation requirements for EB-5 regional centers are a fundamental aspect of the program. There are two types of employment that can count toward your job creation requirement: direct and indirect jobs.
- Direct jobs are those created within the commercial enterprise itself. These are typically full-time positions that result from direct employment. For example, if you invest in a hotel project, direct jobs may include roles such as housekeeping staff and front desk personnel.
- Indirect jobs are positions generated in other businesses as a result of the economic activity created by the EB-5 project. For example, for your hotel project, indirect jobs may include those employed by linen, furniture, and food suppliers to fulfill your orders.
EB-5 Project Requirements
Every application submitted to USCIS for regional center approval must be accompanied by details of an envisaged project.
The following details on Form I-956 will help USCIS determine whether a proposed regional center will be able to have a positive economic impact.
Requirements that a regional center’s planned projects must fulfill:
- Feasibility study: Hypothetical projects require the submission of a comprehensive feasibility study to USCIS. This study should outline the project’s economic viability and job creation potential.
- Business plan: A detailed business plan that demonstrates the potential of the regional center investment to create the required jobs and fulfill program requirements is essential for hypothetical projects.
- Job creation calculation: Job creation is a critical factor. Hypothetical projects must present a credible strategy to generate the necessary jobs within the specified timeframe.
- At-risk regional center investments: The investment capital must be truly “at risk,” which means the investor faces a real chance of losing the capital they’ve invested in the project, as is the case with any business.
Actual projects
An actual project application requires more detailed and conclusive documentation, to be submitted in Form I-956F, Application for Approval of an Investment in a Commercial Enterprise. This documentation should demonstrate how the proposed regional center will promote economic development through statistical evidence arrived at by applying accepted methodologies.
Submitting an exemplar project for approval requires the organizational and transactional documents of the new commercial enterprise (NCE) and includes a sample I-526 petition with its Form I-956F.
The requirements that actual projects must fulfill include:
- Investment capital: Actual projects must secure the required investment amount from EB-5 investors. This capital is typically $800,000 if the project is located in a targeted employment area (TEA).
- Job creation: Actual projects need to demonstrate that the investment will lead to the creation of at least 10 full-time jobs per investor. These must be direct jobs, which means they are to be created within the commercial enterprise itself.
- Documented financials: The project must provide detailed financial statements and records to verify the legitimacy of the investment and the project’s financial health.
Key Point: What Is a New Commercial Enterprise (NCE)?
An NCE is a legal entity or business organization established in the United States with the primary purpose of generating a profit. This entity can take various forms, such as a corporation, limited liability company (LLC), partnership, or sole proprietorship.
- Job creation models: Projects typically feature comprehensive job creation models that have been pre-approved by USCIS to reduce uncertainty for investors.
- Project documentation: Extensive project documentation—including the business plan, economic analysis, and supporting evidence—is crucial for projects to obtain USCIS approval.
Key Point: What Kinds of Projects Get Approved Through Form I-956F?
Any actual regional center project can get pre-approval and become an exemplar if it meets certain criteria set out by USCIS. This includes:
- A credible business plan.
- Realistic and feasible job-creation models.
- Economically viable.
- Evidence of adherence to regulations.
- Transparent and comprehensive documentation.
- Project is located in a TEA.
Applying for EB-5 Regional Center Status
In this section, we’ll take a closer look at the steps you need to take to apply for regional center status within the EB-5 Program.
1. Determine the regional center’s scope
USCIS requires regional center applicants to clearly define both the geographic scope and industry scope of their projects. In particular, the geographic scope should include reference to any TEAs within which the EB-5 regional center will operate.
2. Prepare the required documents
All EB-5 regional center applications (the I-956 petition) require the following documents:
- Operational business plan.
- Corporate structure agreement.
- Sample project business plan.
- Economic report for the project.
- Legal securities documents.
- Legal immigration documents.
- Sample management agreement between the regional center and project.
Due to the complex requirements of USCIS, preparing these documents typically requires the help of professionals with expertise in the relevant fields.
USCIS evaluates business plans based on established standards; a business plan should satisfy ‘Matter of Ho’ compliance requirements. The plan must be credible and include details like the organizational structure, job creation, and hiring schedules. An immigration lawyer can help ensure that your plan meets these criteria.
Demonstrating the project’s eligibility for TEA benefits can also be confusing, and a professional can help you navigate this requirement without making costly mistakes.
3. Submit Form I-956
Once the necessary documents have been prepared—ideally with the help of qualified professionals—Form I-956 can be submitted to USCIS for approval.
Operating an EB-5 Regional Center
After you’ve applied for regional center status and received project approval, you can start operating your EB-5 center. Let’s take a look at what that entails.
1. Establish and maintain compliance
Operating an EB-5 regional center begins with a strong commitment to compliance with USCIS regulations. It’s important to stay informed about the constantly evolving USCIS guidelines, which are critical to the success of your project.
You should also regularly review and update internal policies and procedures to keep them aligned with the latest requirements. This extends to meticulous attention to detail in project selection to ensure they meet the EB-5 Program criteria.
Compliance should be at the core of your operations to maintain a reputable standing with USCIS and instill confidence in potential investors.
All regional centers must submit annual reports through Form I-956G.
2. Conduct due diligence
Successful EB-5 regional centers prioritize thorough due diligence. Before engaging in any project, comprehensively assess potential projects and investors.
Evaluate projects not only for their economic potential, but also their alignment with the EB-5 regional center program criteria. You should also assess their viability, job creation prospects, and overall likelihood of success.
This diligent evaluation ensures that you select projects that are not only suitable for EB-5 financing, but also inspire investor confidence in the regional center’s ability to deliver results.
3. Foster investor relations
Effective communication and investor relations are other important aspects to manage within the EB-5 regional center context. Establish and maintain transparent channels of communication with your EB-5 investors to ensure proper management.
Provide them with regular updates on the status of their investments, the progress of immigration petitions, and any developments related to the projects they’ve invested in.
You should also address their inquiries and concerns promptly and professionally, which builds trust and satisfaction. Strong investor relations can lead to positive word-of-mouth referrals and contribute to the success of your regional center project.
4. Ensure legal and financial oversight
Collaborate with seasoned immigration attorneys and securities lawyers who specialize in EB-5 matters to navigate the complex legal and regulatory landscape. These experts can perform credible job creation analyses and prepare economic impact studies for your projects.
They will help ensure that your offering documents are legally sound and that your EB-5 investors’ capital is genuinely at risk, as required by USCIS. Adhering to U.S. securities laws in the management of investments is essential to avoid legal pitfalls.
5. Implement effective management practices
Implementing strategic management practices is crucial for the success of your regional center. Develop a comprehensive marketing and promotion strategy to attract potential EB-5 investors by utilizing both domestic and international channels.
It’s also necessary to maintain meticulous records of all transactions, communications, and project-related documents. Implement effective risk management strategies to protect investor capital and address potential project challenges proactively.
Finally, be discerning in project selection and prioritize those that align with EB-5 Program criteria and demonstrate strong job creation potential.
What Should You Do Next?
There are a few important documents that you need to file and steps to take when operating your EB-5 regional center. The documents you are required to file are vital to secure your U.S. citizenship and permanent residence status.
1. Manage projects and maintain USCIS compliance
To maintain USCIS compliance, a regional center is required to track its projects’ job creation and file Form I-956G annually. This form is a supplemental compliance document that proves your investment is continuously meeting the necessary USCIS criteria.
Failure to submit Form I-956G can result in the termination of the regional center designation. In addition to this USCIS filing, the regional center must submit proper documentation to the SEC and other agencies that regulate securities at the state and local levels.
2. Prepare documentation for I-829 Petitions
For EB-5 investors, the last step toward obtaining an EB-5 Visa is submitting Form I-829—Petition by Entrepreneur to Remove Conditions—which allows investors to change their status from conditional permanent resident to lawful permanent resident.
This form is filed by each EB-5 investor, but the necessary supporting documentation is provided by the EB-5 regional center.
3. Submit I-526 Petitions
Once USCIS approves Form I-956, the applicant receives USCIS designation as a regional center. However, each project sponsored by the regional center must submit Form I-956F before its investors can file I-526 petitions.
Once an investor’s I-526 is approved, they gain conditional permanent resident status in the country.
Helpful Resources
Take the First Step toward a Brighter Future with EB5AN
Applying for EB-5 regional center status and operating it upon approval can be challenging, but it’s one of the best ways to obtain your green card and secure your future in the United States.
At EB5AN, our team of experienced immigration lawyers is here to simplify this process for you. We offer expert guidance every step of the way, from determining the required forms to be submitted to helping you compile your package of essential documents. Moreover, we can provide recommendations for suitable investments.
Take the first step toward securing your future in the United States. Reach out to us today by visiting our website or sending us an email.
