How to Keep Your EB-5 Funds Secure

The EB-5 program requires you to put a significant amount of capital into a project that will create jobs for U.S. workers. If the investment succeeds and the jobs are created, you and your family can obtain permanent residency in the U.S. This opportunity is appealing to many families around the world. Still, it also raises concerns about whether your funds will be safe and whether you can trust the people managing the project.

These questions are valid because the program involves both financial risk and immigration risk. Unlike other types of investments, your immigration future is directly tied to the success of the project. However, while you cannot remove all risks from EB-5 investing, you can take steps to protect your capital.

In this article, we will explain how the EB-5 investment process works, how to protect your funds, and how to choose safe projects to minimize risks.

An Overview of the EB-5 Investment Structure

At the heart of the EB-5 program is the requirement to invest either $800,000 in a targeted employment area (TEA) or $1,050,000 in a project located outside a TEA. This capital must be directed into a U.S. new commercial enterprise (NCE) that will create at least 10 full-time jobs for qualified U.S. workers.

The law requires that all EB-5 capital be “at risk”, meaning the investment cannot carry guarantees of return or repayment, and there is always a possibility of financial loss. Still, investors are not without ways to strengthen the security of their funds. Let’s take a closer look at several ways to reduce risks and safeguard your investment.

Practical Ways to Secure Your EB-5 Funds

By combining the approaches below, you create a stronger level of security. While no single measure can provide complete protection, together they give you confidence that your investment is being managed responsibly and transparently.

1. Use Escrow Accounts for Initial Protection

To protect your EB-5 capital, ensure your funds are deposited into an escrow account. Escrow is a third-party arrangement that holds funds securely until certain pre-agreed conditions are fulfilled. In EB-5 projects, they ensure that investor funds are not released prematurely. Instead, they are only disbursed when specific requirements are satisfied.

These “fund release triggers” prevent mismanagement by making sure capital is directed to the project only when it is legally and operationally ready. By acting as a safeguard, escrow accounts add an early layer of protection, reassuring investors that their money is handled responsibly until the project is in a position to move forward.

2. Rely on Investor Guarantees

Although EB-5 investments must remain legally at risk, certain guarantees can be offered to investors. These assurances do not violate the at-risk rule. Also, their reliability ultimately depends on the financial health and management of the project. That said, key forms include:

• Return-of-capital guarantees: Your principal investment is returned if the project faces certain issues.
• Repayment guarantees: A repayment guarantee involves a third-party guarantor pledging to repay the EB-5 loan if the borrower cannot. For this arrangement to provide meaningful protection, the guarantor must have resources significantly greater than the EB-5 loan amount.
• Job buffers: Some developers structure their projects to create more than the minimum 10 jobs per investor. This buffer reduces the risk that shortfalls in job creation will impact immigration outcomes.

3. Choose a Reputable Regional Center

Approved by USCIS, regional centers are entities that oversee EB-5 investments within designated geographic areas and act as intermediaries between you and the developers. A reputable regional center can significantly reduce your risk because they have proven experience managing EB-5 funds, coordinating with developers, and ensuring compliance with immigration requirements. Moreover, their expertise in large-scale projects helps secure timely execution and successful job creation.

Additionally, top regional centers maintain strong partnerships with developers, contractors, and local agencies, helping projects move forward efficiently and increasing your chances of both financial and immigration success. By carefully reviewing a regional center’s track record, USCIS compliance history, and success rate, you are effectively safeguarding your EB-5 investment.

4. Conduct Thorough Due Diligence

Alongside following the safeguards above, you need to perform your own due diligence before committing your funds. This involves investigating not only the project but also the people and entities managing it. Below are practical steps to carry it out:

• Research the track record: Look into the regional center’s history, past projects, and investor testimonials. Determine whether they have a consistent record of approvals and successful project completions.
• Understand the project: Carefully evaluate the development stages, timeline, and financial forecasts. Ensure that the project aligns with your investment goals and risk tolerance and that it has a clear strategy for creating the required jobs.
• Review offering documents: Read the project’s offering documents, including the business plan, financial statements, and investment terms in detail. These should clearly outline risks and projected outcomes.
• Consult professionals: Rely on expert guidance from immigration lawyers, EB-5 consultants, and financial advisors who specialize in this field. Their input can help you assess a project’s viability and ensure that all necessary legal and financial protections are in place.

Safeguard Your EB-5 Capital With EB5AN

The EB-5 program provides a powerful opportunity for investors and their families to become U.S. permanent residents. But along with this opportunity comes the responsibility to ensure that your funds are secure. By practicing these guidelines above, you can enter the program with confidence, knowing that your funds are being handled with the utmost care.

EB5AN focuses on security, transparency, and compliance. Our strong track record and commitment to investor protection have helped more than 2,700 families to successfully relocate to the United States while protecting their investment.

If you would like to learn more practical steps to reduce risks and safeguard your financial future, book a free call with our team today.