Hi everyone. This is Sam Silverman, managing partner of EB5AN. Thank you for taking some time to join us this evening after work today. We’re going to provide information on the status of the EB-5 visa program. As many of you know, there’ve been some recent changes to the program that are going into effect in November. So, we’re going to spend some time discussing the changes and how they impact EB-5 investors considering making an investment. And we’re going to speak a little bit about the EB-5 process itself, what the different steps are to obtain the green card as you consider the EB-5 as a route for you and your family to obtain a green card in the United States. As we go through the presentation, any questions that you have, please share them in the chat box, and at the end of the presentation, we’ll go through and address all of the questions that have been submitted. And if there are still remaining questions, you can always message me directly. And my contact information is on the screen.
Okay. We’ll get started.
Well, and this is Mike Schoenfeld here, also managing partner with EB5AN. So, why many of you have likely joined this is because at the end of July , DHS announced that the pending changes to the EB-5 program are going to take effect. So, what does this mean for you? On November 21, 2019, multiple things will change in the EB-5 program. First, and most notably, the investment amount will increase from $500,000 to $900,000 within the TEA level. This is the first increase since 1990. So, what we believe is that this is going to lead to an increase in investments over the coming months. Secondly, there will be significant changes to the way a project qualifies as a targeted employment area. Currently, almost all EB-5 investments happen at the $500,000 level and not at the current $1 million level, because most projects can qualify as a targeted employment area. After these changes go into effect, many projects will not qualify as TEAs anymore, especially those projects in major cities like New York, Miami Beach, LA, San Francisco. The old technique of getting projects to qualify for TEAs won’t apply anymore. There’s other changes that will also come into effect in November, but the two most notable changes are the investment amount increasing from $500,000 to $900,000 and the TEA definition changing.
This is a quick overview of the agenda of what we’re going to cover today. So, first, we’ll go into the differences between H-1B and EB-1, EB-2, EB-3, and EB-5 basics. We’ll talk a little bit about our company, EB5AN. And then, we’ll go through all of the submitted questions at the end. So, as I mentioned, I’m Sam Silverman, managing partner of EB5AN. My background is outlined on the left there with a few bullet points of where I went to school and some accomplishments. And my partner, Mike Schoenfeld, is in the middle there, with some information about his background. Our third partner, Tim Shih, is not available to join us today, but a little bit about him and his background is also there on the right-hand side.
The most important things to note are we come from an institutional background. All of us used to work in big finance, big law—Sam and I both worked at the Boston Consulting Group, and we’ve taken that same perspective and brought it into EB-5. We were some of the earlier adopters of EB-5 in terms of bringing best practices into the industry. So, on the slide here, we have some information on the H-1B program and the EB-1, EB-2, EB-3, which we know many of you may currently be utilizing to work in the US. So, a lot of our current investors are on H-1B, and the program H-1B is meant to bring qualified workers to the US. Depending on what country you’re from, you can then convert that H-1B into a green card. But as we know, there’s a very significant backlog for Indian nationals, especially that are trying to use this H-1B to EB-1, EB-2, EB-3 approach.
And some statistics on H-1B—and we’ll show the counterside to EB-5 later on—is that a vast majority of H-1B employees in the US are of Indian birth. Now, why is there such an interest in EB-5 over the last few months? So, ever since the current [Trump] administration came in, there have been some suggested changes to the H-1B program, which would really hurt it being utilized by many individuals. Potentially removing a spouse’s ability to work, shortening the eligibility, denying more H-1Bs—these are all potential issues that the current administration has suggested implementing. Additionally, H-1B is currently a lottery program. It’s a completely random lottery. So, even if you went to Harvard, you’re no more likely to get that H-1B than somebody that went to a smaller school. And it really is a complete lottery system. And the lack of certainty is very frustrating for many of the investors that have decided to utilize EB-5 because they didn’t see a long-term future in using the H-1B.
So, when we look at what the difference is between the H-1B and some of the other EB categories, the main benefits of pursuing a green card through the EB-5 program are 1), there’s no need to receive an offer of employment. So, under some of the other categories, you have to have a job that’s linked to your immigration status. Here, that’s not the case. There is no labor certification, there’s no particular background or qualifications, no certain degree requirements or STEM requirements. And if you choose, after holding the green card for a number of years, five years, usually, in total, then there’s an opportunity, if you choose, to become a U.S. citizen. So, again, the major benefits are there’s no specific educational or employment background or requirements, and it provides a direct path to obtaining the green card.
And to kind of summarize the daily life benefits when you compare having a green card in the United States versus not having a green card, right? If you don’t have a green card, you’re obviously limited to only corporate organizations, typically, that are larger employers and typically, you know, are only located in more urban, you know, larger city areas, where there’s enough of a demand to hire H-1B employees, right? So, you’re geographically restricted to only those companies that are willing to go through the H-1B sponsorship process, which is more expensive, and only certain types of companies are willing to make that effort to do that. You’re also constantly required to monitor changes in immigration rules. And even if you get the H-1B, you’re tied to a specific job, and there’s limited flexibility. So, that limits the amount of money you could get if you change jobs and it limits, you know, the optional jobs that you could do. On the other side, if you do have a green card, you’re pretty much open to any type of employment—you can start your own business, be an entrepreneur. You can work for one or more than one company as a consultant. You can work anywhere in the United States, and you’re eligible for Social Security benefits upon retirement. So, it’s really complete flexibility—the same employment flexibility that a U.S, citizen has is also the same as a green card holder. So, it’s a really significant benefit that really allows you to live your life as you would completely design it yourself without any type of restriction.
There are also some other soft benefits to holding a green card. One of them is admissions to undergraduate and graduate schools. So, in the United States, all of the major colleges have a certain percentage of the enrollment slots allocated to international applicants. And so, due to that, there’s typically a lot more competition for these slots that are allocated only to international students. So, as a result, just by being a domestic applicant, being a permanent resident, green card holder, or citizen, your odds of admission can go up substantially—three to four times as likely just by being considered for admission as a green card holder or a citizen, right? So, you know, for those of you with kids or, you know, yourselves considering a graduate program, that’s a significant advantage that will be there as a green card.
Beyond admission, that same advantage also rings true when you look at the actual cost of education. So, this is looking at Berkeley, a state university in California. And if you look at the in-state costs, green card holder in state, it’s almost half as expensive as what you would pay as an out-of-state or, effectively, international applicant, right? So, in addition to having a much better chance of being admitted, you’re also going to be paying a significantly lower amount of money in tuition.
So, now let’s start flipping over and talking a little bit more about EB-5. One question we always get is, “How does the EB-5 timeline work, and what are the steps involved with going through the EB-5 process?” We’ll talk a little bit more about how EB-5 actually works in the next section, but for now, the general timeline—first, as the individual applicant, you submit a form called the I-526 petition. This is where you submit information on yourself, your source of funds for where you earned, or how you got, the $500,000, whether it was a gift or you earned it yourself, along with information on the project itself. It’s very important to choose a high-quality project where, during this I-526 petition, you’re showing how it meets the EB-5 program requirements and the job creation requirements, which we’ll talk a little bit more about on in the next section. After you submit this I-526, it typically takes about a year and a half to two years to be approved.
At the time that it’s approved, if a visa is available for you, you’re then immediately able to get this temporary green card. It’s always immediately available unless you’re in a country where there is retrogression—historically, that’s been China, recently Vietnam, and as of a few months ago, India just hit this backlog for the first time. Next, after you are available to get your green card, you change your status, if you’re within the US, or you go to consular processing, if you’re outside of the US, where you then eventually get your temporary green card. You have a 24-month conditional period where you have to prove that you created the jobs that you said you were going to create when you set out to start the EB-5 program. If you choose a high-quality project, this conditional residency period is purely a formality, and you will have already created the jobs well before that point, but you do still have to wait these 24 months. After that, you submit your last form, the I-829.
And at that point, the green card becomes permanent. The key thing to focus on as an EB-5 investor is you need to submit this I-526 petition prior to November 21, when the price will go up from $500,000 to 900,000. That is the step that you absolutely must complete before November 21—the rest of this will all happen later, and you will be grandfathered in. The way the rule was written is that projects themselves don’t get grandfathered, but individual investors do. So, if you move quickly and file before November 21, you will be at the $500,000 level in a high-quality project that does still currently qualify as a TEA.
Now, going a little bit more into what is the EB-5 program. So, the EB-5 program is almost the opposite of the H-1B program. H-1B is meant to bring talented individuals to work in the US. Instead, EB-5 is meant to bring foreign capital to the US to create U.S. jobs. So, the program’s been around since 1990. It’s always been at the $1 million and $500,000 levels since 1990, until November of this year . It’s administered by USCIS, and there are two key parts of the program. First, as an investor, you need to invest $500,000. This investment has to go towards creating 10 jobs. As long as you make this investment, continue to have your money invested throughout your immigration process, and can prove that you created the jobs, you will end up with a green card, unless you’re personally ineligible for reasons such as you’re a terrorist, your source of funds wasn’t clean and you couldn’t show where your money came from—things like that. But assuming personally you’re qualified, you will get the green card if you invest the money and create the jobs.
So, historically, China has been the major recipient of EB-5. If you look at this chart—it’s a little bit outdated now—because this is based on I-526s, which typically take a year and a half to two years to be approved. So, you can imagine this data is lagging by about a year and a half to two years. So, looking at the left, China was using a vast majority of the petitions, you can then look at the areas where Brazil, Vietnam, and India have all rapidly grown, India most so. So, after that last right chart of 2017, there were many more applicants in 2018 and in 2019 so far. So, there has been a sharp uptick.
So, to quickly summarize some of the things we talked about, the EB-5 program, in terms of the major benefits—EB-5 provides a clear path to a green card. You invest in a high-quality project, preserve your capital, and once you obtain the green card, there’s no restrictions on any type of employment requirement or past work experience in order for you to start your own business or select any type of job that you prefer. Of course, on the drawbacks side, it is a significant amount of capital that’s being invested—$500,000 of hard-earned money. So, you need to make sure that the project that you’re selecting is being developed by a reputable company that has extensive experience with EB-5. There’s also a limit of 10,000 visas per year. And as we just mentioned, there are additional waiting periods for certain countries due to recently high demand.
In terms of the costs, the total raw total cost is roughly $570,000 in administrative fees. The actual investment of $500,000, hiring an immigration attorney to help prepare the source of funds showing where the investment capital has been sourced, whether it’s from gifts and inheritance, taking mortgage on a piece of property, earnings from working at a hospital—whatever the source is, as long as it’s legal, it just needs to be documented to show the government that the funds have been legally obtained by the investor. And then there’s also a small USCIS filing fee of about $4,000 at the time the application is submitted. Also, one point that we didn’t cover earlier is that as an EB-5 investor, upon approval, the investor’s husband, wife, and any unmarried children under the age of 21 will all receive the permanent green card as a result of the single $500,000 investment that has been made.
So, what do investors look for in a project? There’s a number of criteria there on the left side, one through five, that are very important when considering and evaluating any project or EB-5 investment. The first is, is there a sufficient job creation happening in the project to support EB-5 investors’ 10 job requirements? The minimum is 10 jobs that have to be created per investor. There is no maximum, so safer projects are those where there’s significantly more than 10 jobs available for investor. And the safest projects are those where at least 10 jobs have already been created in project at the time the investor actually submits their application and invest their money. USCIS specifically allows investors to get credit for jobs that have happened before joining the project because job creation is due to capital being spent, typically, on construction costs, which we’ll discuss later. Second, you want to look for a regional center with a strong reputation and track record of success. Our regional center has about 1,185 investors from about 40 different countries. Third, an experienced project operator and developer. Fourth, a well-structured capital stack showing where the capital needed to complete the development of the project successfully is going to come from, and fifth, strong financial fundamentals of the project. What are the basic economics? What’s the cost? What is it going to be worth when it’s finished?
Now we’ll spend a few minutes talking about the regional center credentials of EB5AN.
So, a bit of background on us. So, we started this company in 2013. In total, we have over $1 billion of assets under development in deals that we funded, and we are one of the largest regional center operators in the country. We own 15 original centers that cover 27 states. We’ve worked on over 10 projects as the general partners of the deal actually placing the funds into the project. The key things to focus on here are the fact that we’ve been around for many years, we have a strong track record with USCIS, 100% I-526 project-related approvals. And we’ve worked on many deals.
As I mentioned, we’ve had a very strong track record and approval from USCIS with 100% approval on all adjudicated petitions on the I-526s from a project perspective. So, very well known in the industry and an industry thought leader—we’ve been recognized by NES Financial as a medallion solution partner. We are the only regional center medallion solution partner. And we earned this because we actually helped NES design part of their software in terms of compliance and tracking, because they believe that our regional center was best in class in terms of the tracking and reporting that we do.
The other things that we focus on is bringing transparency that the industry. When we first came into EB-5, one of the things that bothered us was the fact that a lot of information wasn’t very transparent, either to project developers thinking about using EB-5 or to investors themselves. The first two tools here, the TEA map and the job calculator, are meant to help a developer or someone thinking of structuring a project to understand if it works well for EB-5. The third, maybe more relevant for everyone joining this webinar, is the EB-5 Project Risk Assessment Questionnaire. We realized that investors want a guide to help evaluate projects, what they should think about. And we laid this out in terms of the two key risks that you should think of as an investor. First is immigration risk. You want to make sure that no matter what, you are going to get your green card. So, how do you do that? You find a project where it’s either pre-approved by the government already—construction is already going on, it’s fully capitalized, and the project is going to get done. Next, you always want to look at your investment with the financial lens—how safe is my money? Am I going to get my money back? Of course, the goal is to get your $500,000 back. So, what this questionnaire does is it helps you think of a framework to go through step by step and evaluate a project based on those two key criteria.
As we discussed earlier, one of the things that we’re most proud of as a company is that investors around the world from a wide variety of backgrounds have consistently found value in our approach to structuring EB-5 investments. So why do EB-5 investors consistently choose to work with EB5AN? The main reason is that our strategies lower both immigration and financial risk for EB-5 investors. And we do that through a number of key criteria that are not required by USCIS but are best practice and reduce immigration and financial risk for all of our EB-5 investors. The first of these is an I-526 refund guarantee.
The goal of this investment—the primary goal of course—is to receive a permanent green card for yourself, your spouse, and your children under the age of 21. And so, in all of our projects, if your I-526 petition, your initial petition for the green card—if it’s not approved, you will be refunded 100% of your investment. The second item is fully committed projects. All of the Kolter projects either have, or are expected to obtain, third-party bank financing. The key here is the third-party bank financing—Kolter is a very experienced developer with over $15 billion of development experience. They work with all of the major publicly traded banks, including Wells Fargo, Regions Bank, Fifth Third Bank, CIBC, et cetera. All of these banks only lend to projects and to developers that they’ve done extensive diligence on and are comfortable with both the developer, Kolter, as a borrower and the project as a financially feasible project with sufficient equity for the loans to be made.
The third item is job creation from construction alone. As we touched on earlier, job creation for most EB-5 projects comes from construction cost. As long as a certain amount of money is spent on the project, there’s an automatic number of EB-5 jobs that are allocated or created by the project. So, just by spending the money and building the building, there’s sufficient job creation for all of the investors in the project. The fourth item is a compelling financial return. EB5AN and Kolter preferred equity projects provide investors with significantly above-market returns for EB-5 investment. Since our team comes from institutional backgrounds, private equity investing, and big law and consulting, all of our EB-5 investors receive detailed quarterly financial reports that provide maximum transparency on the status of their investment over the course of the investment. We’re happy to share examples of these reports.
Sixth, best-in-class development team. As a company, we’ve decided to only partner with institutional private developers and banks with strong balance sheets and extensive EB-5 project experience. The Kolter group has completed 10 different EB-5 projects with our team.
One of the questions that we’ve been getting most frequently is, “Do I have time to start the process now as an EB-5 investor? And what do I need to do to make sure I file before the investment amount increases?” So, on the screen, we have an illustrative timeline. So, the main thing that you need to think about is that it’s not only selecting your project—the source of funds in the middle of the page is one of the things that can take the longest within the EB-5 process. So, very quickly figuring out an immigration attorney to work with and starting on the source of funds, even as you’re still diligencing the project, is the right approach. Quite often, you have to get old tax records, property records, and things that can take several weeks or months to get because there may be translation required. If you look at it from the left to the right, once you select your project, make it through your source-of-funds process with your immigration attorney, subscribe to the project and wire your investment, at that point, you are able to file your application. So, the green box is the key. Until you have actually funded your investment, you are not able to file your petition. So, you need to complete all of these steps before November 21  to make sure you make it in at the lower investment amount.
All right. So now, we had a few questions come in during the presentation. So, we want to address one of the questions—that is, “So, what do I need to do to make sure I can invest and file before November 21?” So, what I would say is, the key is, first, find an immigration attorney—we can suggest several immigration attorneys. They are independent attorneys, but we have had many good experiences with attorneys that we can recommend.
One question we got is, “Can you combine the $500,000 investment with more than one investor?” The answer to that is no, it’s $500,000 for investor. Each investor is a family unit—husband, wife, and kids. But if there are two unrelated family members, like two brothers that are each over 21, for example, each of those investors would be a separate investor and would have to invest $500,000 individually.
Another question that we have is, “Is the EB-5 program only for investors outside the US?” The answer is no. If you’re already within the US on an F-1 student visa, H-1B, any other legal visa, you are also able to use the program. This is for any non-citizen or non–green card holder that wants to get a green card.
So, one question we had was on the source of funds. Can you use a home equity line of credit or a loan to come up with a $500,000? That is actually one of the most common ways that investors show where their $500,000 has come from. If you’ve purchased a house in the US, it’s gone up in value, and you want to use that equity as part of your investment, it’s typically a pretty straightforward way to show where the funds have come from.
Another question we see is on the immigration side—“If you have a previous priority date from an I-140, does that priority date gets carried over?” And the answer is the EB-5 program is separate from any other status you may have. If you applied for E-1, E-2, or E-3, they are allowed to go in parallel. So, a common question we get is, “Can I apply for EB-5 and then send my kids to the US on an F-1 visa?” The answer is, yes, you’re allowed to do F-1 each or any other program in conjunction with EB-5 and use the two of them together.
So, we’ve got a number of questions on what can be the source of the $500,000 in investment capital. So, to address a number of those… so, yes, the money can be raised through loans.
You can take a loan on your house, you can take a loan on your car, you can take a loan individually. All of those loans are going to be allowed. You can also receive a gift. You can receive heritance. You can earn income. All of those sources are going to be allowed. The only thing that’s not going to be allowed is illegal capital—so, money that you got from selling drugs or selling illegal weapons, something like that, is obviously illegal and it’s not going to be allowed, but essentially any other type of loan or gift or earning of capital is going to be allowed as long as you can provide the documentation to show how the money ended up in your control.
So, I think in the interest of everyone’s time, let’s cut the conversation here. We’ve answered a bulk of questions that we got. Anything else that you have that’s individual questions—sometimes on source of funds or personal situations—please reach out to the email or the phone number listed on the screen, or you can send an email to email@example.com and schedule some time to speak with either Sam or I individually. We can go through the questions that you have, and if there’s any detailed immigration-related questions on the source of funds, we can put you in touch with very well-known and respected EB-5 immigration attorneys that can help further that conversation. So, we want to thank you very much for your time. Thanks again.