Because direct investments can count only the jobs generated directly by the EB-5 project, the greatest risk of such investments is the failure to create enough jobs to satisfy the EB-5 program’s employment generation criteria. Almost all EB-5 projects are sponsored by regional centers because these projects are allowed to count indirect and induced job creation.
Foreign nationals who make a direct EB-5 investment can count only the positions that were created by the new commercial enterprise (NCE) in question and appear on its payroll. Directly created jobs are usually operational positions associated with the NCE.
United States Citizenship and Immigration Services (USCIS) sets out many more requirements governing employment generation. For example, investors must create a minimum of 10 jobs. Each position must last for at least two years and be filled by workers with legal permission for employment in the United States. Moreover, jobs created by EB-5 projects must be full-time (at least 35 hours per week). Investors cannot count part-time jobs toward creating the 10 required positions, but they are allowed to use job sharing arrangements in which one full-time job is divided among several employees. It is important to note that positions filled by the investor and their immediate family members cannot be counted.
Regional center projects, in contrast, calculate employment generation much more flexibly. Besides direct jobs, regional center investors can also count indirect and induced employment. Indirect jobs are created by the EB-5 business’s economic impact on the area, and induced employment is generated when the business’s employees spend their wages in the community. This flexibility makes it much easier to create the 10 required jobs, so most foreign nationals choose to make an EB-5 investment in a regional center-sponsored project. Doing so mitigates their immigration risk significantly.
Regardless of whether a project is direct or regional center-sponsored, potential investors should examine it carefully to make sure it complies with all USCIS regulations.
