Not all EB-5 journeys are the same. There exist two main pathways to a U.S. green card through the EB-5 visa program—direct investment and regional center investment. Both have advantages and disadvantages, depending on the investor’s goals and wishes, but far more EB-5 investors opt for regional center investment because it is generally considered more advantageous. Below are some of the benefits of investing through an EB-5 visa regional center.
Lower Immigration and Financial Risk
Reputable regional centers select the projects they take on extremely carefully. While investors are always strongly recommended to Conduct their own due diligence on a project, projects offered by EB-5 visa regional centers are likely to be high quality and pose lower immigration and financial risk. Many EB-5 visa regional center projects also have exemplar status, which significantly facilitates the I-526 process for investors.
Regional center projects also tend to be located in targeted employment areas (TEAs). TEAs are urban areas where the unemployment rate is 50% higher than the national average or rural areas with fewer than 20,000 inhabitants. EB-5 investors working with TEA projects need only invest $900,000, while those involved with projects outside of a TEA must invest at least $1.8 million.
Limited Managerial Duties
For EB-5 investors with managerial skills and experience who wish to be heavily involved in the new commercial enterprise (NCE), direct investment is a good idea. For the rest, however, EB-5 visa regional centers are preferable.
One of the EB-5 program’s requirements is that the investor be involved in the management of the NCE, which, for direct investments, typically means conducting day-to-day managerial activities. Depending on the structure of the project, however, investors may also satisfy this requirement by engaging in policy formation (i.e., voting on matters). This option is typically available for investors who invest through EB-5 visa regional centers, lifting the burden of managerial responsibility from their shoulders.
Easier Job Creation Requirements
Regardless of the EB-5 path an investor chooses, all investors are required to demonstrate the creation of at least 10 new permanent, full-time jobs as a result of their investment. One of the biggest advantages of regional center investment is the relaxed requirements surrounding this rule.
Direct EB-5 investors must prove the creation of at least 10 new direct jobs, which are either construction jobs or jobs on the NCE’s payroll (investors can count construction jobs only if construction lasts for at least two years). To satisfy the job creation requirements, direct EB-5 investors should be highly experienced in business management and confident in their ability to help drive the NCE to success.
The job creation requirement is easier for regional center investors. Regional center EB-5 investors are permitted to include indirect jobs (the jobs of external suppliers and service providers) and induced jobs (jobs created in the community by the NCE’s employees spending their wages), as long as they use accepted economic methodologies to calculate job creation. Therefore, the job creation requirement is far easier to meet with regional center investment, which lowers immigration risk.
The Freedom to Live Anywhere in the United States
Most EB-5 investors who directly invest in a project participate in the daily management of the NCE, meaning they are tied to the project’s location. The most attractive EB-5 projects for investment—those located in TEAs—may not be in the most desirable areas to live, and there may be no areas nearby where the EB-5 investor wishes to live.
Regional center investors are free from this burden. With their role as a limited partner being enough to satisfy the managerial involvement requirement, investors who work with an EB-5 visa regional center are free to live anywhere in the United States regardless of the location of their EB-5 project. This gives EB-5 investors the freedom to choose the most promising EB-5 project they can find without restricting their living opportunities. With regional center investment, an investor can invest in an EB-5 project in Florida and live in Massachusetts.
Another bonus of this freedom is that regional center investors can work or study during their investment process. An EB-5 visa offers easier access to U.S. colleges and universities, making it the perfect solution for students. With nothing tying investors to the state of their EB-5 project, they may study anywhere in the United States.
