Last updated: Dec 01, 2022
While foreign investment can be an attractive option for funding a project, it can be difficult for EB-5 novices to understand how to navigate the program and ensure that a project not only complies with program regulations, but is marketable to prospective EB-5 investors. Once a project is structure and documentation is compiled, sponsors must raise ,,,,
Promoting the Project to Investors
The EB-5 program is a popular option for foreign investors seeking a path to a U.S. green card. The program is well-promoted in countries around the world and demand is high. In fact, for a handful of countries, there are more applications in the queue than there are visas for that given year. However, just as there is a healthy market of investors, there is also a healthy market of available projects, making for ample competition for new projects. In some cases, investors may already be identified (either through personal relationships or other avenues), but in most cases, projects must be promoted to attract investment. Regional Centers may fulfill this role for project developers –through affiliation with broker-dealers and by working with foreign agents - but some do not. Businesses that are raising capital through the Direct EB-5 pathway may work directly with agents or broker-dealers.
All Regional Centers and issuers (businesses), as well as investors, must abide by U.S. Securities laws as well as the integrity measures outlined in the EB-5 Reform and Integrity Act of 2022.
What is the Process for Investors?
Regional Center Projects
For each new project, a Regional Center will file a Form I-956F, the application for approval of an investment in a commercial enterprise, and pay the associated $17,795 fee. In conjunction with the form, Regional Centers must also file associated documentation, including a comprehensive business plan, credible economic analysis, and a Targeted Employment Area analysis (if applicable) for the project.
Investors may begin investing in new Regional Center projects and submitting individual Forms I-526 once the Regional Center receives a processing receipt for Form I-956F from USCIS.
Direct EB-5 Projects
Once all documentation is compiled, the EB-5 investor will complete and submit a Form I-526 and pay the associated filing fee of $3,675 plus a $1,000 fee that is allocated to an EB-5 Integrity Fund.
The immigration process for EB-5 investors is a two part process. After subscribing to an offering or investing capital into a business or project, the investor will file an I-526 petition with the United States Citizenship and Immigration Service (USCIS). The petition goes into a queue and is eventually processed by USCIS. Following approval, investors apply for and are issued a conditional green card. After two years, investors can apply for a permanent green card by submitting an I-829 petition. It is at this point that all evidence must be submitted by the investor to show that his/her capital remained at risk and deployed and that the minimum jobs were created by the job creating entity. Once the I-829 is approved, the investor receives his/her permanent green card.
After the Raise
Once EB-5 capital is raised and deployed, it is important that project expenditures, financial reports, and job creation are all well documented to ensure that investors have the documentation needed for a successful I-829 filing. Entities that receive EB-5 funds must also manage those funds according to EB-5 program regulations. Financials must be audited, or EB-5 funds must be placed in a separate account managed by a fund administrator. Regional Centers will manage this process for sponsored projects. For businesses that raise capital directly, it is advisable to seek legal advice to ensure all reporting and administrative policies align with program requirements and best practices.