EB-5 is an immigration option for those with the resources to invest in U.S. job creation. It allows an immigrant to be eligible for permanent residence if he or she invests at least $1,000,000 in the U.S.–and with it creates at least ten jobs. (The monetary requirement is half if the investment is made in a designated “Target Employment Area,” which is either rural or suffering from an unemployment rate at least 50% higher than the national average.) There are two ways to do this: by going it alone with individual or “Direct” investment, or by using a Regional Center. We have said before that those who wish to immigrate in order to invest should use direct investment, while those who want to invest in order to immigrate should consider using a Regional Center. Both sides have their advantages, but the Regional Center option is viewed as a safer bet–with greater support from others–than the alternative.
A Regional Center is a government approved economic entity that takes in foreign investment and outputs domestic job creation. In contrast with EB-5 Direct, Regional Center immigrant investors do not need to be more than minimally involved in managing the investment. Most Centers boast several apparently effective schemes for protecting and returning investor money, each with varying levels of risk/potential reward. However, it is not possible for an immigrant investor to avoid risk altogether. (The government requires that the money be at risk for green card eligibility.)
Another key attraction of the Regional Center program, as opposed to EB-5 Direct, is its more inclusive definition of job creation. Under EB-5 Direct, all ten required jobs must manifest themselves as actual employees of the company or enterprise being invested in by the immigrant. These are called direct jobs. However, for Regional Center investors, “indirect” jobs may also be counted.
To be countable, an indirect job only needs to exist as a result of economic activity produced by the investment. These jobs often come from businesses that emerge in order to service the direct job creator. While obtaining a green card is easier with the ability to count indirect jobs, it is somewhat difficult to prove that their existence is due to the investment. But that’s why successful Regional Centers often have access to state-of-the-art economic impact programs that can calculate indirect jobs based on the quantity and qualities of already created–or planned–direct jobs. However, the more a Center relies on indirect jobs, the weaker its ability to prove its connection to them becomes.
Getting the investment process started can be easy. Several websites host a list of approved Regional Centers and their contact information, like this one: http://www.eb5greencard.com/regional-centers/regional-center-list.php. Many Centers have quality websites and market themselves well, but unless an immigrant is sure that a particular one is a good financial bet, several precautions should be taken. It may be a good idea to hire an expert to evaluate its history, financial situation, and investment offerings. However, some things must be ascertained before a foreign national commits to invest. They are
- The reputation of project leadership;
- The Center’s business plan and economic impact calculation methods;
- How long the average investor’s funds are used;
- The immigration success rate of people that have used the Center;
- How it plans to extract the correct amount of money from the project (to be returned to investors); and
- What financial securities investors have.
While the immigrant’s making a profit is very important, the main issue here is his or her ability to achieve unconditional permanent residence. In order for all of a Regional Center’s immigrant investors to fulfill the requirements of the EB-5 program, there needs to be at least ten times as many jobs created as there are constituent investors. It is obviously possible for this to not happen, and there must be a plan for this event. These are matters that an immigrant investor and his or her immigration attorney should discuss before any concrete plans are made. The Law Firm of Shihab and Associates has never lost an EB-5 case–and is happy to assist new clients.
(It is also possible for an immigrant investor to start a new Regional Center. If this is done well, he or she should be able to “have cake and eat it too” by having control over the project while reaping most advantages of using a Regional Center. Check out our article on the subject here. In addition to this, we have two articles on EB-5 Direct here and here.)