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What Are the Benefits of EB-5 Regional Center Projects?

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Foreign nationals who want to live in the United States have different options depending on their goals. Whether you just want to work temporarily or become a citizen, the U.S. immigration system provides you with these options.

However, when trying to decide on which, it’s important to note that each investor visa option has different benefits. From investing through the EB-5 regional center program to becoming a treaty investor through the E-2 visa, you get specific benefits, but some more than others.

This article explains different pathways to getting a U.S. investor visa and discusses the benefits of investing in low-risk EB-5 regional center projects.

U.S. Investment Visas

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There are two main types of investment visas in the United States: EB-5 and E-2.

The EB-5 Immigrant Investor Program was started by the U.S. Congress in 1990. Its primary aim is to stimulate the U.S. economy while providing foreign nationals with a direct pathway to U.S. permanent residency. This means that, if successful, foreign investors and their eligible family members, which include spouses and unmarried children under the age of 21, can obtain U.S. Green Cards.

The Immigrant Investor Program Office (IPO) of the United States Citizenship and Immigration Services (USCIS) manages this program. It has two different investment pathways, which will be explained in more detail below.

On the other hand, there is the E-2 Treaty Investor Visa. It only applies to foreign nationals in countries that signed a treaty with the United States. For foreign investors to qualify, USCIS requires that they make an investment in an American entity they need to actively manage.

Importantly, the investment needs to be sizable and able to boost the economy, like the EB-5 program. While there is no specified minimum investment requirement, the investment must be enough to guarantee the enterprise’s successful operation.

Also, the E-2 investor’s only purpose for coming to the U.S. must be to grow and run the business. This usually calls for holding a significant managerial role or at least a 50% ownership interest in the company. That is why this nonimmigrant visa option does not lead to a Green Card. It only allows foreign nationals and eligible families to live and work in the U.S. temporarily.

Direct vs. Regional Center Investments

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As mentioned above, foreign nationals looking to immigrate to the U.S. using the EB-5 program have two options. They can either file Form I-526 for direct investments or Form I-526E for regional center investments. This section details both investment options so you can figure out which works best for you and your family’s specific circumstances.

What Is a Direct EB-5 Investment?

A direct or “standalone” EB-5 investment requires the foreign national to invest funds directly into a new business. According to USCIS’s EB-5 requirements, this business must create or save at least 10 direct, full-time jobs for U.S. workers.

To apply, the investor must first set up a business entity, such as an LLC, C-Corp, or S-Corp. After investing, the foreign investor must also actively manage the business.

The required capital investment is $1,050,000, but it can be reduced to $800,000 if the investment is in a targeted employment area (TEA). Throughout the investment term, the investor often maintains control over the investment funds and makes decisions depending on business demands.

Most EB-5 investors opt for the regional center route instead of direct investment due to several practical reasons. In a direct EB-5 project, only one investor can be involved, making it a less flexible option. Additionally, direct investments only count direct jobs created by the project, which makes meeting the job creation requirements more challenging.

Direct EB-5 investors also need to take on more responsibilities. They must get approval from USCIS for their project, which involves providing a detailed business plan and other documentation.

What Is an EB-5 Regional Center Project?

Another option under the EB-5 program is to invest in a regional center-sponsored project. This way, foreign nationals can invest in projects managed by USCIS-designated regional centers indirectly.

Regional centers can pool investments from multiple EB-5 investors. They can also count indirect and induced jobs in addition to direct ones toward the required job creation numbers.

Large-scale real estate development projects are usually the types of investments made through regional centers.

More than 95% of all EB-5 investments have historically been made through regional centers.

What Does a Regional Center Do?

Regional centers gather and allocate funds from foreign investors to EB-5 projects. They typically combine investment capital from multiple EB-5 investors, although they don’t solely rely on these funds. They also use other funding sources, such as bank loans.

Each investor must contribute the minimum needed investment amount, which is normally $1,050,000 if the project is not in a targeted employment area (TEA), or $800,000 otherwise.

To maintain their status, regional centers have to abide by USCIS standards, which include submitting yearly reports and conducting audits. They also oversee projects to ensure funds are spent according to the business plan and provide investors with quarterly reports.

How Does Investing in EB-5 Regional Center Projects Benefit You?

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Pathway to Permanent Residence

If your goal is to get a Green Card for you and your immediate family members, filing an EB-5 petition is the best option. If the process is successful, you may apply to become a U.S. citizen after five years. On the other hand, eligible investors who choose the E-2 visa route cannot get permanent residence and need to keep renewing their visas.

Passive Investment Advantage

When considering the different visa options, it’s important to note the varying levels of involvement required. The major difference between an E-2 visa, direct EB-5 investment, and an EB-5 regional center investment is the amount of direct involvement you would need to have in the entity.

Direct EB-5 requires the investor to be deeply involved in both running the business and handling the immigration process. To prepare and submit a successful petition to USCIS, investors usually need to hire several professionals, such as tax consultants, securities and immigration lawyers, and business plan writers.

On the other hand, with regional center investments, most of the work is done by professionals in the regional center team. Typically, investors only need to hire an experienced EB-5 immigration attorney to help them with due diligence and source of funds processes.

Direct investments are more high-risk in that sense as well, since investors are responsible for fulfilling all EB-5 requirements alone.

Easier Job Creation

Under the EB-5 program, the new business must create 10 full-time jobs for U.S. citizens, which is key to an investment’s success.

Regional centers offer a simpler path to meet this job creation requirement. Investors can count direct jobs created by their investment, as well as indirect and induced jobs. Indirect and induced jobs are estimated by economists using standard methods and include jobs created as a result of the investment activities. This typically results in higher job creation numbers for regional center projects compared to direct EB-5 investments.

Reduced Risk in Investment

In the regional center pathway, investments can be structured as loans, often in real estate developments. This setup allows investor funds to hold a more senior and stable position in the project’s capital stack, reducing risk compared to the equity-based direct EB-5 investments.

Additionally, regional centers collaborate with developers to ensure investors can recover their money with interest. On the other hand, direct EB-5 investments rely solely on the success of the business, making them generally riskier. This collaboration and structured approach make most regional center investments a safer option for EB-5 investors.

Increased Investor Security

The EB-5 Reform and Integrity Act of 2022 (RIA) introduced stricter integrity measures for regional centers, enhancing investor security and transparency.

EB-5 regional centers now face stricter financial audits, ensuring proper use of funds and early detection of any irregularities. They must provide detailed reports on project progress and financial status. To prevent fraud, background checks are required for regional center principals and developers.

These new regulations mandate policies that protect investors’ rights and interests, including clear communication about risks, expected returns, and exit strategies.

Foreign nationals investing in rural EB-5 projects with I-956F approval also benefit from a more streamlined immigration process thanks to the RIA’s priority processing and concurrent filing provisions.

Choose the Right Investment Option With EB5AN

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Choosing the right U.S. investor visa option can be challenging. It’s important to pick a pathway that fits your goals while minimizing immigration and financial risks. This is why getting help from industry professionals can make this process easier and increase your chances of success.

EB5AN stands out as a leading regional center operator with a track record of helping over 2,300 families relocate to the U.S. as permanent residents.

For more insights into how investing in EB-5 regional center projects can benefit you, feel free to schedule a free consultation with us today.