While the EB-5 program requires investors to be involved in managing the new commercial enterprise (NCE) through either day-to-day management or policy formation, no specific experience or education is required. If the investor will take on a more active role in management, business or financial experience could certainly be helpful, but the primary requirement is that the NCE creates at least 10 jobs per investor.
In direct EB-5 projects, EB-5 capital is invested directly into the NCE, which must be the same as the job-creating entity (JCE). The NCE will therefore be responsible for generating at least 10 full-time positions per EB-5 investor. Moreover, direct EB-5 investors are typically expected to participate in the NCE’s day-to-day operations. Direct EB-5 investment may be the most suitable option for investors with managerial experience who want to retain control over how their EB-5 capital is used. Many investors who are interested in reaping significant financial returns from their EB-5 project choose the direct investment option.
In contrast, the NCE and the JCE in a regional center project are typically separate, and EB-5 capital is received by the regional center sponsoring the project. In most cases, regional center EB-5 investors sign on as limited partners of the NCE. As such, they are required only to participate in policy formulation and important business decisions; regional center investors are usually exempt from participating in daily business management.
In addition to their more relaxed managerial requirements, regional center projects also enjoy freer job creation criteria. Regional center investors are allowed to count indirect and induced jobs, which are a result of the project’s spending in the local community.
Due to these reasons, the vast majority of EB-5 investors choose regional center-sponsored projects and thus enjoy much lighter managerial duties.