Congress created the fifth employment-based preference (EB-5) immigrant visa category in 1990 for qualified foreigners seeking to invest in a business that will benefit the U.S. economy and create or save at least 10 full-time jobs for U.S. workers.
The basic amount required to invest is $1 million, although that amount is reduced to $500,000 if the investment is made in a rural or high unemployment area (i.e., “Targeted Employment Area” (TEA)).
Of the 10,000 EB-5 green cards available each year, 3,000 are reserved for foreign nationals who invest through a Regional Center. United States Citizenship and Immigration Services (USCIS) estimates that approximately more then 90% of EB-5 visas are based on Regional Center investments.
Foreign national investment through the EB-5 program promotes widespread economic growth, in addition to the creation of numerous American jobs. All investors must meet the stringent requirements and screening processes mandated by the USCIS.
Family: The EB-5 program allows the foreign investor and his or her immediate family (spouse and all unmarried children under the age of 21) to immigrate to the U. S., obtain a green card, and proceed to U.S. citizenship with the benefits of a U.S. passport, while at the same time they invest their money in a project of their choosing.
Regional Center Advantage: The Regional Center Investment Program aids foreign investors by directing and professionally managing their investment in the designated business and geographic focus of their Regional Center.
Expediency: Obtaining citizenship through an EB-5 investment is considerably more expeditious than traditional methods of immigration, some of which can take as long as ten years or more. Through an EB-5 investment, investors can typically obtain permanent residency within 3-5 years.
Personal and Professional Freedom: Freedom to live, work, and retire anywhere in the U.S.
Convenience: No visa sponsor requirements
Children’s Education: Access to public elementary, middle, and high-schools and in-state tuition at public colleges and universities
The Economics of EB-5
Spending associated with EB-5 investors contributed $3.4 billion to U.S. GDP and supported over 42,000 U.S. jobs in 2012.
Spending by EB-5 investors also contributed $448 million to federal tax revenues and $265 million to state and local tax revenues.
What is an EB-5 Regional Center?
An EB-5 regional center is an organization, designated and regulated by USCIS, which facilitates investment in job-creating economic development projects by pooling capital raised under the EB-5 immigrant investor program. Regional centers can be publicly owned, (e.g. by a city, state, or regional economic development agency), privately owned, or be a public-private partnership.
What do Regional Centers do?
Identify investment opportunities that will create jobs in local communities, often in partnership with economic development agencies. Assist in marketing those investment opportunities to investors from around the world.
Ensure that the investment offering complies with federal and state securities laws and SEC regulations as well as specific EB-5 requirements.
How are EB-5 investments affiliated with Regional Centers structured?
EB-5 investments that are affiliated with EB-5 regional centers are made through private placements – the sale of securities to a relatively small number of select investors. Like all private placements, which are used by companies to raise capital in a number of contexts, EB-5 private placements are governed by federal and state securities laws and regulations.
Are EB-5 regional center financing options cheaper for companies than other sources of capital?
Yes. In many instances, EB-5 funding is a lower-cost form of capital than alternatives because investor demand for return on their investment is often lower for EB-5 capital than other sources of capital. In addition, securing EB-5 capital increases the overall liquidity of a business or project which, in turn, reduces the cost of acquiring capital from other sources.
What risks do investors face in EB-5 regional center investments?
By law, EB-5 investments must be “at risk” in the same way that any equity, stock or other type of investment carries inherent risk. Regional centers, like other entities that market investment opportunities, cannot guarantee a return on investment. Regional centers also cannot guarantee return of the investment principal to the investor.
What kind of financial commitment do EB-5 investors make?
By law, an EB-5 investor is required to invest a minimum of $1 million, unless the investment is located in a Targeted Employment Area (TEA) – a rural area or area of high- unemployment designated by USCIS. Regional centers funding projects in TEA’s can accept a minimum of $500,000 from each EB-5 investor.
What risk do companies have in accepting EB-5 investments?
Companies bear no additional risk for EB-5 investment. They interact with the money as any other equity or financing investment, albeit often at a lower cost.
How do EB-5 regional centers help communities?
EB-5 Regional Centers facilitate direct investment in projects that meet the job creation and economic development goals of designated geographic areas. Regional Centers pool investments made by multiple EB-5 investors and deploy that capital to large-scale projects, often in coordination with regional economic development agencies.