Education Still a Major Draw of the EB-5 Program

Rumors of a large scale EB-5 project in rural Michigan this week began to draw some concern. A group of 400 Chinese EB-5 investors have reportedly expressed a desire in funding an upscale housing development approximately 20 miles from Ann Arbor and the University of Michigan. The development would consist of 400 units – one for each EB-5 investor – designed specifically for Chinese Immigrants.

The investors hope to take advantage of the USCIS EB-5 Immigrant Investor Visa Program while purchasing the real estate developed and being able to send their children to one of the top Universities in the country at U.S. resident tuition rates.

For anyone familiar with the EB-5 program and its requirements, the rumored EB-5 project – while awaiting official release of information from local townships – would be cause for concern regarding USCIS EB-5 regulations and issues that have yet to be explored. Could this community create and sustain enough EB-5 jobs to meet the 10 job requirement per investor?

With 400 homeowner-investors, the project would need to create or preserve at least 4,000 jobs during the investment period. This EB-5 project would be unprecedented and, if the company can get it to work, could possibly be replicated throughout the United States. What would that mean for EB-5 stakeholders? Plenty!

For starters, EB-5 Investors would be able to get the proverbial ‘two birds with one stone’ – they could make their EB-5 investmentand purchase a home for residence. The USCIS would have to evaluate the EB-5 job creation of such a program. If the job creation was approved, the EB-5 program would have a new EB-5 project model to replicate. That leaves us with one last question, would an EB-5 project like this upscale housing development in rural Michigan change the United States’ melting pot into a salad bowl in which all of the ingredients touch, but never truly mix? That is a big question for the USCIS to ponder before the EB-5 program expires at the end of September. 

U.S. EB-5 Regional Centers extend a helping hand to fellow North American Immigration Consultants

Both the United States and Canada have immigrant investor programs. In the United States, the program is called the EB-5 Immigrant Investor Visa program. In Canada, the program is simply the Immigrant Investor program. While the details of each program vary, there exists as slight a similarity between the two programs as there is between the two countries. Both programs have a job creation aspect to them and both require a significant capital investment amount in return for lawful permanent residency—citizenship.

Naturally, the appeal to the United States versus Canada is left to interpretation by the individual investor. Who, one might ask, may have the ability to influence the opinion of such investors? The answer is: none other than immigration consultants.

Immigration consultants generally help guide foreign national investors through the immigrant investor or EB-5 process. Unfortunately for Canadian immigration consultants, the Canadian government has enacted, and since reached, a quota limiting the number of immigrant investors receiving permanent residency status. Because of the rate at which this quota was reached, Canadian immigration consultants are left in a state of flux and panic in regards to their own employment. What are they to do with the large number of clients and foreign nationals looking to take advantage of immigrant investor programs? Consider the EB-5 Immigrant Investor program of the United States.

This is where the EB-5 Regional Centers of the United States come into play. The EB-5 Immigrant Investor program of the United States also has a Green Card quota. However, not once since the inception of the EB-5 program in 1990 has that EB-5 Visa quota been reached, or even tested.

While Canadian immigration consultants find themselves in the proverbial ‘Catch 22’, U.S. EB-5 Regional Centers are eager to lend their friends to the north a helping hand. By redirecting potential investors to the EB-5 program of the United States, the Canadian immigration consultants will find themselves with continued employment and the U.S. can inch closer to issuing its allotted number of EB-5 immigrant investor visas and permanent residency.

Without permanent residency to issue, Canadian immigration consultants have no product to offer to potential investors. Partnering with EB-5 Regional Centers gives Canada’s immigration consultants a total of 10,000 more potential visas and Green Cards to offer to their clients. Choosing to work with EB-5 Regional Centers and exercising the EB-5 Immigrant Investor Visa program before its sunset at the end of September gives Canadian immigration consultants the opportunity to earn commission on every single EB-5 investor that they refer to EB-5 Regional Centers.

By taking advantage of this unique opportunity to work together as North American neighbors, the EB-5 Regional Centers of the United States and the immigration consultants of Canada can take part in helping to rebuild the economy of and create jobs for the citizens of the world’s greatest nation which, in turn, will benefit economies and individuals the world over.

EB-5 and Banking Relationship

EB-5 and Banking relationship:

EB-5 investments, by their very nature, involve some element of risk for investors. The USCIS requires that the money invested into EB-5 projects be considered ‘at-risk’ in order to qualify for the EB-5 program. For years, the lending industry has misunderstood this ‘risk’.

Banks have historically been hesitant to extend loans to EB-5 projects, because of the perceived risks associated with the program. However, the risks lie not in the EB-5 aspect of the project, but rather in the fundamental structure of each project itself.

Sound projects, EB-5 or otherwise, share many of the same basic characteristics. They tend to follow a proven business model and express strategies for development, growth, and exit. The projects also provide a good or service with enough market demand for sustainability and have enough initial capital reserves to fund the first few months of operation.

The difference between an EB-5 and non-EB-5 project is its association with, or lack thereof, USCIS requirements. EB-5 projects must create jobs in order to qualify for the EB-5 program. EB-5 projects are identical in structure to non-EB-5 projects, yet have an emphasis on job creation. EB-5 projects are no less successful than non-EB-5 projects due to of their association with the EB-5 Immigrant Investor program. Projects, in general, find success through sound business structuring. Not only do EB-5 projects possess sound business structuring, they also manage to add job creation to their overall mission.

The lending industry does not readily extend loans to EB-5 projects, because of their concern that the projects will be unable to service the loans. However, as expressed in EB-5 business plans, loans are serviceable through the approved EB-5 investment capital held in escrow.

An EB-5 project has a dedicated fund with approved foreign investment capital held in an escrow account. As with anything else government-affiliated, the process of completing the EB-5 program, and consequentially releasing of funds, experiences some delays. Because of these delays, EB-5 projects seek early stage funding from the lending industry.

Instead of looking at the term ‘EB-5’ as a red-flag, lenders should consider EB-5 projects as extra-finely-structured projects. Not only are EB-5 projects job creating, but the success of the project significantly affects the lives of the stakeholders. In other words, EB-5 Regional Centers facilitate the development of projects and businesses which are required by program regulations to be economically viable, financially sustainable, and profitable for all stakeholders. Therefore, EB-5 regulations put projects in a position to service any loans that they may have acquired, making them an ideal choice for the lending community.

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.

EB-5 Visa Program News Blog: EB-5 Program

EB-5 Visa Program News Blog: EB-5 Program: A True Melting Pot: The USA and EB-5 Immigration The United States Citizenship and Immigration Services (USCIS) makes available 10,000 Uni...

EB-5 Program

A True Melting Pot: The USA and EB-5 Immigration

The United States Citizenship and Immigration Services (USCIS) makes available 10,000 United States EB-5 visas for EB-5 investors and their families annually. Although the USCIS has established this figure for possible EB-5 visas per year, the number of EB-5 visas actually issued every year is far less. For example, for Fiscal Years 2005-2011, the EB-5 visa usage was: 158, 744, 806, 1,360, 4,218, 1,885 and 3,463 respectively. Even with an outlying figure like that of 2009, the EB-5 visa usage for Quarter 1 of Fiscal Year 2012 is 2,364. That number puts EB-5 visa usage for FY12 well on its way reaching the 10,000 EB-5 visa limits.

What does the FY12 EB-5 visa usage figure mean? And what has accounted for such an increase in usage? The answer to the first question is three-fold. First, the increased EB-5 visas quite literally means that more high wealth foreign nationals have been granted legal permanent residency in the United States and are therefore increasing local spending and boosting local economies. Second, increased EB-5 visas translates into increased EB-5 investments, which ultimately translates into increased projects being funded by EB-5 money. Last, and most importantly, increased EB-5 visa usage means an increase in American jobs. The USCIS estimates that each EB-5 investment results in an average of 2.5 EB-5 visas. If each EB-5 investment creates the minimum required 10 jobs and we divide the total number of EB-5 visas used by the 2.5 EB-5 investment average, then we can conclude that nearly 10,000 jobs were created for American workers in the First Quarter of FY12 through the EB-5 program.

Addressing the second question, this dramatic increase in EB-5 visa usage could be a result of several factors. First, 2012 is an election year. One of the key issues that candidates are focusing on is the jobs problem in the United States. The charter of the EB-5 program is rooting in the concept of job creation. President Obama, while not directly naming the USCIS’s EB-5 Immigrant Investor Visa Program, has alluded to ‘foreign investments’ several times in recent months. It would behoove any and all candidates to consider using the EB-5 program as one component in helping to address the jobs problem in the United States.

There has also been an increase in the number of I-924’s filed in the First Quarter of FY12. The I-924 is an application for either the designation of a new regional center or the expansion of an existing one. Regional centers exist to facilitate the matching of EB-5 investors and projects in need of funding. Therefore, it only makes sense that increased EB-5 regional centers increases the overall EB-5 visa usage.

On a final note, the ever-prevalent notion that the US economic outlook remains dim in the short term also lends itself a possible explanation for the increase in EB-5 visa usage. Bank lending has not dramatically improved since its downturn and projects that may have been holding out for traditional funding are now more willing to accept nontraditional sources of funding. The EB-5 program has been around for over two decades and, in this time of both job creation and funding need, is now a more attractive and more viable option for projects.

In summary, the increase in EB-5 visa usage, as demonstrated by the YTD figures of FY12 as reported by the USCIS, implies not only that jobs are being created, projects are being funded, and businesses are opening across the country in several different industries, but, more importantly, that the future of the United States economy and job market is looks to be brighter and more hopeful as EB-5 immigrant investors help to develop and rescue the world’s great Melting Pot that is the United States of America.

EB-5 Visa Program News Blog: FY12 Q1 EB-5 Statistics

EB-5 Visa Program News Blog: FY12 Q1 EB-5 Statistics: USCIS has released new statistics as part of the presentation for the 1/23 EB-5 Stakeholder Meeting . Form I-924 (& Pre-I-...

FY12 Q1 EB-5 Statistics

USCIS has released new statistics as part of the presentation for the 1/23 EB-5 Stakeholder Meeting.

Form I-924 (& Pre-I-924) Regional Center Initial Applications
Fiscal Year or Quarter	Receipts	Approvals	Denials
FY12 Q1	41	14	22
FY11	192	80	51
FY10	110	36	30

Form I-924 (& Pre-I-924) Regional Center Amendment Requests
Fiscal Year or Quarter	Receipts	Approvals	Denials
FY12 Q1	17	4	3
FY11	86	43	7
FY10	42	42	11

Form I-526 Petition Final Actions
Fiscal Year and/or Quarter	Form I-526 Approvals	Final Action %	Form I-526 Denials	Final Action %
FY12 Q1	1,076	83%	222	17%
FY11	1,563	81%	371	19%
FY10	1,369	89%	165	11%
FY09	1,262	86%	207	14%
FY08	640	84%	120	16%
FY07	473	76%	148	24%
FY06	336	73%	124	27%
FY05	179	53%	156	47%

Form I-829 Petition Final Actions
Fiscal Year and/or Quarter	Form I-829 Approvals	Final Action %	Form I-829 Denials	Final Action %
FY12 Q1	144	93%	11	7%
FY11	1,067	96%	46	4%
FY10	274	83%	56	17%
FY09	347	86%	56	14%
FY08	159	70%	68	30%
FY07	111	69%	49	31%
FY06	106	64%	59	36%
FY05	184	62%	112	38%

EB-5 Visa Usage
Fiscal Year	Total EB-5 Visas Issued
FY12 YTD*	2,364
FY11	3,463
FY10	1,885
FY09	4,218
FY08	1,360
FY07	806
FY06	744
FY05	158
*Estimate of FY12 Visas Issued YTD, reported by the Department of State as of 01/17/2012.