What is a Safe EB-5 Project? How to Pick the Right EB-5 Regional Center?

When the EB-5 Immigrant Investor program first started gaining popularity, it was quickly explored on a very superficial level. Projects initially thought that EB-5 money was easy to come by and that they would be able to fully fund large scale projects through EB-5. As EB-5 regional centers began popping up and project solicitation initiated, it soon became very clear that funding a project entirely through EB-5 would take a lot more specialization and hard work.

The first thing that projects must consider when attempting to raise funds through EB-5 is that the EB-5 Immigrant Investor program is a USCIS, and therefore, government, program. As such, the program is inherently slower in releasing funds than traditional funding sources. It is just as much the responsibility of the project to understand this as it is the EB-5 regional center’s to remind projects of this ‘delay’.

Another consideration before choosing an EB-5 regional center is their experience. How long have they been designated for operation by the USCIS? During that time, while factoring in the unavoidable lag time, what has the EB-5 regional center accomplished? Are they on their way to starting or completing EB-5 projects or have they been sitting idle?

A third question to ask about an EB-5 regional center is whether or not they have overseas contacts that can help them recruit investors. If they do not have the contacts, then how do they fund their EB-5 projects? Recruiting international investors is a challenging endeavor and EB-5 regional centers must be able to generate the funds—domestically or internationally—required for their projects.

Several EB-5 regional centers are currently experiencing challenges with their projects. Some are facing law suits while others are defaulting in their projects due to a lack of funds. These problems affect all parties involved. Projects, investors, regional centers, and communities suffer when an EB-5 project fails to follow through on its promises.

So, what can the involved parties do to protect themselves? Research.Do your own due diligence on the project, EB-5 regional center, and amount of community support. Is the project structured to meet the EB-5 requirements? How long has theEB-5 regional center been operating and how do they find their investors? Is the local community supportive of the project or will the project and EB-5 regional center face challenges as they start to get the project off the ground?

Remember, EB-5 is not easy money and the entire funding process takes a considerable amount of time. One should fully understand the EB-5 program before committing to it so as to avoid ending up in the place of one of the EB-5 regional centers currently experiencing difficulties. There are roughly 200 EB-5 regional centers designated throughout the United States. Choose wisely.

EB-5 Visa Program News Blog: Sunset of the USCIS EB-5 Immigrant Investor Pilot ...

EB-5 Visa Program News Blog: Sunset of the USCIS EB-5 Immigrant Investor Pilot ...: Sunset of the USCIS EB-5 Immigrant Investor Pilot Program is set for September 30, 2012. The EB-5 Pilot Program is one of the longest runn...

Sunset of the USCIS EB-5 Immigrant Investor Pilot Program is set for September 30, 2012. The EB-5 Pilot Program is one of the longest running ‘pilot program’ in United States government history. It is the Pilot Program—a program which has been routinely renewed since its inception in 1992—that designates regional centers to operate within the realm of EB-5 investments. If the EB-5 Pilot Program sunsets at the end of September, what concerns would that raise for the various members of the EB-5 community?

For starters, let us clarify that the perception of the EB-5 program coming to an end is untrue. The EB-5 Immigrant Investor program is a law enacted by congress for operation through the USCIS. The Pilot Program, however, the program that designates regional centers to operate as matchmakers between projects and investors, is just that: a pilot. If the pilot program reaches sunset and is not extended, it bears no effect on the EB-5 Program itself.

Due to the misconceptions of the September 30^th deadline, investors may be concerned about their ability to complete the program. If operating through a regional center, then the investors’ I-526 application must be received by the sunset date—September 30, 2012. If the USCIS acknowledges receipt of the application, then the investor may complete the program through the regional center project. It is important to note that the USCIS, like any government entity, has a very structured process that takes time to complete and it can take anywhere from 6-8 months to receive I-526 approval.

Projects may also be concerned about the sunset of the Pilot Program. If enough investors do not get their I-526 applications into the USCIS by the sunset date, then project funding through a regional center will not be possible and they will have to begin looking for alternate sources of funding. Without regional centers, projects still interested in funding through EB-5 are going to have to search even harder to find EB-5 money and adjust their business plans to support the Original EB-5 program which allows for only a single investor—drastically reducing the capital investment amount.

Because the requirements of the Original EB-5 program are slightly different than those of the Pilot Program, a few things would suffer without the extension of the latter. First, the job creation aspect would no longer provide such significant benefits to the community in which a project is located. Second, investors would have to take an active role in the management and operations of the business, taking away responsibility and ownership from the project. Lastly, because investors are not investing into a fund, the total investment capital for a business or project would be that of a single investor; an amount that is typically the minimum required and significantly less than what regional center projects have been seeking.

At the end of the day, the possible sunset of the EB-5 Pilot Program negatively affects US economic growth. The economic impact of a regional center—Pilot Program—project is greater than that of a business created through the Original EB-5 program as it has the ability to create more jobs, fund a larger project within a more impactful industry, and help to stimulate growth within local communities. At a time when banks are tightening their grips on lending to new business ventures, extending the EB-5 Pilot Program would bring new jobs, businesses, and growth to the United States.