EB-5 investors have two possible investment methods in the EB-5 program: direct investment in a new commercial enterprise (NCE) or indirect investment through a regional center. Depending on an investor’s goals and skills, direct investment may be suitable, but most EB-5 investors choose regional center investment because it offers several benefits.
Lower Immigration and Financial Risk
One of the primary benefits of EB-5 regional center investment is the higher chances of success, both in terms of obtaining U.S. permanent resident status and earning a lucrative return on investment. Regional center investment offers lowered EB-5 project risk in a variety of ways:
- EB-5 investors do not need to be heavily involved in the day-to-day management of the NCE, reducing risk for investors with insufficient managerial experience.
- EB-5 investors who work with a regional center with government preapproval may not need to present as much evidence to prove their investment has met EB-5 requirements.
- Regional centers rigorously vet projects to ensure high quality and low risk.
Higher Likelihood of TEA Designation
Both regional center projects and direct EB-5 projects may qualify for the lower minimum investment amount ($900,000) if they are located in a targeted employment area (TEA), but regional centers tend to carefully select projects that qualify for TEA designation. Investors who invest directly and wish to invest the lower minimum amount must calculate the TEA qualifications of potential projects themselves.
Relaxed Requirements for Job Creation
EB-5 investors who work with regional centers may include indirect and induced jobs in their job calculation analysis, making it easier to fulfill the job creation requirement. No matter the route investors choose, their EB-5 investment must fund the creation of at least 10 full-time, permanent jobs for legal U.S. workers. The requirement is easier to fulfill when investors are permitted to include the jobs of external suppliers and service providers of the NCE (indirect jobs) and the jobs fostered in the community through the spending of the NCE employees (induced jobs).
The Freedom to Live Anywhere in the United States
Since EB-5 investors who choose the direct investment route are required to participate in the project’s management, they are bound by the geographical location of their EB-5 project. For regional center EB-5 investors, since the regional center takes care of the managerial duties, investors are free to live wherever they please. Investors can even live on the opposite side of the country: If you want to invest in an EB-5 project in Florida but live in Chicago, the regional center program allows you to.
Benefits of Direct Investment
While there are many advantages to regional center investment, direct investment may still be the optimal path for some investors. In particular, EB-5 investors looking to expand their business to the United States may find direct investment more profitable. For investors with managerial experience, direct investment can be a good idea, as they have direct control over their investment and have the potential to make larger profits.
If you’re considering direct investment in an EB-5 project, you should also think about the various downsides:
- Direct investment projects are less likely to be located in a TEA.
- You may need to live close to your EB-5 project, which may be undesirable if the project is located in a high unemployment or rural area.
- You will likely incur higher financial and immigration risk.
- Your funds must facilitate the creation of at least 10 new direct jobs—either construction jobs or jobs on the NCE’s payroll.
What Makes the EB-5 Program Ideal?
The main reason investors worldwide flock to the EB-5 program is to obtain a U.S. green card, which can eventually lead to U.S. citizenship, if investors choose to apply for naturalization. Below are some of the advantages of the EB-5 visa:
- EB-5 investors can apply for permanent resident status for their spouse and unmarried children younger than 21.
- Investors (or their children) can more easily gain admission to U.S. colleges.
- Investors can take advantage of the many business and investment opportunities in the United States.
- Investors may work at any company anywhere in the United States.
- Investors may travel freely around the United States and even abroad.