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How to Choose a Reliable Direct EB-5 Project

How to Choose a Reliable Direct EB-5 Project

The EB-5 Immigrant Investor Program, which has enabled thousands of foreign nationals to relocate to the United States, underwent significant changes in June 2021. On June 22, a district court repealed the EB-5 Modernization Rule, which had made several unwelcome alterations to EB-5 policies. As a result of the court’s ruling, the minimum EB-5 investment amounts dropped to $500,000 for targeted employment area (TEA) projects and $1,000,000 for non-TEA projects. This news was met with widespread approval across the EB5 investment industry—now, many more foreign nationals will be able to participate in the program.

Shortly after the district court’s ruling, the regional center program was suspended on June 30 because Congress failed to pass the EB-5 Reform and Integrity Act. As of August 12, 2021, the regional center program has yet to be revalidated, and USCIS is not accepting I-526 petitions associated with regional centers. It is unclear when Congress will take action to reauthorize regional center investments, so only direct EB-5 investments are allowed for the time being.

The expiration of the regional center program and the lowered EB-5 investment amounts will likely cause an unprecedented surge in direct investments. Even though there has never been a better time to invest directly, interested foreign nationals should carefully evaluate potential EB-5 projects to reduce their financial and immigration risk. When assessing direct EB-5 investment opportunities, potential investors should consider the following factors.

How likely is it for the project to be completed?

Reliable projects take measures to prepare for a possible shortage of EB-5 investment capital. For instance, they might have a bridge loan or another source of funds to use if only part of the expected EB-5 capital is procured. Signs that a project will likely be completed include a construction completion guaranty and a senior loan with a large bank. Additionally, the project should have access to irrevocably committed funds from the developer.

Will the project generate the required employment?

Every EB-5 investment must create or preserve at least 10 full-time jobs for U.S. workers. Therefore, investors need to evaluate each project’s potential for job creation. The most trustworthy EB-5 projects have an ample projected job cushion—they plan on generating many more jobs than the 10 positions required per investor. Real estate development projects that are already well under construction are especially likely to create the needed jobs.

How reputable is the project developer?

Potential investors also need to do research on the project developer’s background, finding out how many projects it has already completed and how much experience it has. If the developer is currently in a serious lawsuit, has a history of defaulting on loans, or has been unable to complete similar projects in the past, then investors should look for other projects. Unfortunately, foreign nationals have occasionally been the victims of fraud by unscrupulous developers, so an in-person or virtual site visit might also be appropriate.

Foreign nationals planning an EB5 investment need to consider many other characteristics of potential projects, such as their fund disbursement agreement and standing with USCIS. EB-5 experts such as EB5 Affiliate Network offer their clients valuable expertise, helping them to minimize the risks associated with EB-5 investments and choose the safest available projects.