Investors are not restricted when seeking investment opportunities; they can contact whomever they deem necessary (including project developers, regional centers, immigration counsel, etc.) to find and evaluate EB-5 projects. Issuers, however, must follow certain Securities and Exchange Commission (SEC) regulations regarding marketing to potential investors. For instance, the SEC may require foreign migration agents to possess broker-dealer registration.
The EB-5 program encourages potential investors to carefully evaluate EB-5 projects. Doing so reduces the immigration and financial risk associated with making an EB-5 investment.
An investor’s immigration risk—that is, their chances of failing to obtain a U.S. green card—largely depends on how well the project is structured. All reliable EB-5 projects have a contingency plan in case there is a shortage of EB-5 capital. Even if the project is unable to attract all the investors it had originally planned, it should still be completed using an alternative source of funds such as an initial bridge loan. Other signs that project will likely be completed include the irrevocable commitment of the EB-5 funds to the job-creating entity (JCE), a senior loan made with a major bank, and, if applicable, a construction completion guarantee.
A project’s potential for job creation is another crucial aspect that investors must examine carefully. The most trustworthy projects aim to create far more than 10 jobs per investor. In fact, investors can be virtually guaranteed to fulfill the job creation requirement if they invest in a project that is well under construction and has already created at least 10 jobs per investor.
Regarding their financial risk of experiencing significant losses, EB-5 investors must do thorough research on the project developer’s background. If the developer has completed many similar projects successfully, never defaulted on a loan, and previously worked with the project’s lender, the project is likely to be reliable.