Business owners across the United States have enjoyed access to EB-5 investment capital since 1990. Under the EB-5 program, foreign nationals are allowed to apply for permanent resident status in exchange for investing in a qualifying U.S. business. The U.S. economy has been strengthened by billions of dollars of EB-5 investment capital during the past decades, and thousands of jobs have been created as a result of EB-5 funding. Despite the difficulties caused by the COVID-19 pandemic, the EB5 investment industry is still going strong in 2021. In fact, due to the June 2021 repeal of the controversial EB-5 Modernization Rule, the minimum EB-5 investment amount for targeted employment area (TEA) projects is only $500,000. Before the June 2021 court ruling, the investment threshold was $900,000.
As a result of the lower investment amount, many more foreign nationals now have the means to participate in the EB-5 program. This is also good news for U.S. business owners, who can now market their projects to an even larger target audience of potential EB-5 investors.
Even though EB-5 investment capital is convenient and secure, creating an EB-5 business and bringing it to market successfully may take several years. A competent team of professionals needs to be assembled to ensure compliance with all United States Citizenship and Immigration Services (USCIS) regulations. One of the most crucial steps of creating a successful EB-5 project is writing a detailed, credible business plan—USCIS evaluates EB-5 business plans carefully before granting approval.
General Guidelines for EB-5 Business Plans
In essence, an EB-5 business plan must prove that the project is financially viable and compliant with all USCIS regulations. EB-5 business owners must craft strong business plans to gain USCIS approval and attract potential EB-5 investors—if a project’s business plan is unconvincing, foreign nationals are unlikely to invest in it.
EB-5 business owners should examine the Matter of Ho court ruling, which provides an excellent example of a USCIS-compliant EB-5 business plan. The following four elements are essential to all EB-5 business plans that follow the guidelines set out in Matter of Ho.
Job Creation Projections
Creating employment is one of the main objectives of the EB-5 industry; every EB-5 investment must create at least 10 full-time jobs for qualifying U.S. workers. Therefore, it is crucial for EB-5 business owners to show how they will create the needed jobs. The business plan must include a hiring schedule, the total estimated number of jobs, and detailed descriptions of each position.
Permits and Licenses
To qualify for EB5 investment capital, EB-5 projects need numerous licenses and permits. The EB-5 business plan must prove that the project can operate legally and has received all the needed permits.
The Marketing Strategy
Every EB-5 business needs a solid marketing approach to attract EB-5 investors. Many EB-5 business owners hire foreign migration agents to find overseas investors. It is also important to create attractive, compelling marketing materials that provide key information about the offering. If the project offers an ample job cushion—that is, it plans on creating more than 10 jobs per investor—this should be noted in the marketing materials.
An EB-5 business plan must show that the project is financially viable. To that end, project developers must include financial projections for the project’s first five years. Of course, any predictions must be supported by reliable data or third-party sources.
As we have seen, bringing an EB-5 project to market can be challenging. Therefore, EB-5 business owners should consult with EB-5 specialists and immigration counsel. The expertise these professionals provide can be invaluable.