How to Choose an EB5 Project?Choosing an EB-5 Project requires investors to consider multiple factors and to conduct thorough due diligence. An EB-5 Project is the outcome of investments from foreign nationals seeking to qualify for the EB-5 Visa. Due diligence on an EB5 Project enables investors to choose the right EB-5 Project investment that fits their objectives. EB5 Projects in industries such as hotel construction, restaurants, and real estate are top choices for EB-5 Visa investors.

Selection and investment in an EB 5 Project should be done before the EB5 petition is filed. Below are important points to consider when choosing an EB-5 Project Investment.

  • Job creation for at least 10 full-time US citizens.
  • Investment in a Targeted Employment Area (TEA) location for a minimum investment of only $800,000.
  • EB5 Direct Investment or Regional Center Investment.
  • Return on investment and time of repayment.
  • Documentation review. 

1. EB-5 Project Industry 

An EB-5 Project should meet the U.S. Citizenship and Immigration Services (USCIS) standards on the EB-5 Visa Program. An EB-5 Project should stimulate the U.S. economy and create jobs for U.S. citizens. EB5 Projects in hotel construction, real estate, and restaurant industries are ideal commercial enterprises for the EB5 Program. EB5 Projects in these industries are capable of generating more than enough jobs for investors with the construction alone. Real estate, hotels, and restaurants are businesses that have consistent demand to boost economic growth and secure repayment for investors.

2. Location

The minimum investment for an EB 5 Project depends on the location of the business. An EB 5 Project in a Targeted Employment Area (TEA) requires an investment of $800,000. An EB 5 Project in a Non-Targeted Employment Area requires an investment of $1.05 million. A Targeted Employment Area (TEA) is a census tract or collection of census tracts described as a region with high unemployment or a rural area. EB5 TEA Project investors are eligible for priority processing of their petitions and are given 32% set aside visas from the annual total of available EB 5 Visas. 

A High Unemployment TEA is a location with an unemployment rate of at least 150% of the national average unemployment rate. High Unemployment TEAs are in a metropolitan statistical area (MSA) or a location with a population of more than 20,000. 

A Rural TEA is a location outside a metropolitan statistical area (MSA). A Rural TEA cannot have a population of more than 20,000 or be on the border of a municipality with more than 20,000 residents.

3. Direct EB-5 Project

A Direct EB-5 Project is a type of EB5 Investment that results in a new business, the purchasing of a business, or the funding of an existing business. A Direct EB-5 Project counts jobs that directly result from the operation of the business. EB5 Direct Investment Projects require investors to be actively involved in the development, management, and operation of the business. Common EB5 Direct Investment Projects are in franchises, retail store chains, IT companies, and restaurants.

4. EB-5 Regional Center

An EB-5 Regional Center is a private or public economic entity assigned by the U.S. Citizenship and Immigration Services (USCIS) to boost US economic growth. EB5 Regional Centers collect capital from various investors to fund EB5 Projects. EB5 Regional Center Projects do not require investors to be directly involved in the business. EB-5 Regional Center Projects are able to count direct, indirect, and induced jobs. Indirect and induced jobs are employment positions that result from the EB 5 Project’s positive economic impact on the community. Regional Centers need to be continually reauthorized by the US Congress. The EB-5 Reform and Integrity Act (RIA) of 2022 reauthorized EB-5 Visas under Regional Centers until September 30, 2027.

5. Job Creation

The minimum requirement for job creation for the EB-5 Visa is 10 full-time jobs for qualified U.S. workers. Qualified workers are U.S. citizens, lawful permanent residents, conditional permanent residents, asylees, and refugees. The full-time jobs must be created and maintained within the 2-year conditional permanent residence of the EB5 investor. EB5 Direct Investment Projects are only able to count direct jobs while Regional Center Projects are able to include direct, induced, and indirect jobs.

6. Return on Investment

With the newly raised minimum investment amounts for both TEA and non-TEA EB 5 Projects, more investors are looking into the potential of seeing returns on their investments. Investors should look into the history of EB-5 Project Developers and Regional Centers in terms of capital repayment. A proven track record of repaying investors means that the EB-5 Project Developers and Regional Centers have a reliable exit strategy. 

7. Time of Repayment

USCIS requires that the EB-5 Investment should remain at risk until the filing of Form I-829. Form I-829 (Petition by Investor to Remove Conditions on Permanent Resident Status) is submitted to the USCIS to obtain lawful permanent residence for EB5 investors and their families. Investors should note when capital repayment happens for Regional Center Projects. Regional Centers that repay investors at the time of I-829 filing are preferred over those that repay investors after I-829 adjudication. The typical processing time for an I-829 adjudication is between 22 and 48.5 months. 

8. Capital Stack

Capital stack pertains to the types of capital or funding invested in the EB-5 Project. The different types of investment in a capital stack have different levels of risks and returns. Below are the different types of capital stack in EB 5 Visa Projects.

  • A Senior Loan (debt) comprises the largest component in a capital stack. Senior loans are secured by a mortgage or deed of trust on the property. Senior loans have the lowest risk level to the lender and are the first to be repaid. Senior loans have the lowest repayment in a capital stack.
  • A Mezzanine Loan (debt) has payment priority over preferred equity but is paid after a senior loan. Mezzanine loans are common capital funding for EB 5 Visa Projects because of their size and potential for job creation. Mezzanine loans have higher risk-adjusted returns compared to equity investments.
  • A Preferred Equity serves as subordinate debt with a fixed return. Preferred equity investors are repaid before common equity investors but after mezzanine debt investors. 
  • A Common Equity gives investors equity interest in the property ownership. Common equity investors are paid last but have more potential to earn more because of higher risks.  

9. Exit Strategy

An exit strategy is a plan that outlines how financial assets will be liquidated or tangible financial assets will be sold when specified conditions have been fulfilled or exceeded. The most common exit strategies in EB5 Visa Projects are refinancing or selling the project. Refinancing an EB5 Project involves a bank loan obtained after years of development to repay investors. Profit from the selling of an EB5 Project is another way of returning EB5 capital to investors.

10. Document Review

An extensive review of documents involving the EB-5 Project, Regional Center, and project developer should be done to ensure compliance with USCIS and the EB 5 Program. A thorough documentation review helps investors decide whether an EB 5 Project is suitable for their investment and immigration goals. 

Here are examples of documents that must be reviewed when choosing an EB-5 Project Investment. 

  • Loan agreements, commitment letters, and/or term sheets.
  • Offering documents, business plan, and solicitation documents.
  • Employment contracts, employee benefits plans, and pension or profit-sharing plans.
  • Financial statements, income statements, tax returns, balance sheets, and mortgages.
  • Third-party appraisals and market feasibility studies.
  • Business permits and licenses, land purchase agreements, and lease contracts. 
  • Architectural and construction plans, schedules, and costs.
  • Escrow agreement and other escrow-related documents.
  • Targeted employment area (TEA) certification if applicable.
  • Economic impact analysis on expected revenue, job creation, and EB 5 Project timeline. 
  • Correspondences with federal or state regulatory agencies.
  • Copies of Articles of Incorporation and By-Laws of the company.
  • Copies of a prospectus or private placement memoranda (PPM) related to securities issued by the EB5 company or its subsidiaries. 
  • Copies of Form I-924 (Application for Regional Center Designation Under the Immigrant Investor Program) and relevant exemplar approval petitions.

How to Choose an EB-5 Project Investment?

Choosing an EB-5 Project Investment involves the process of due diligence. EB5 Due Diligence is the review and evaluation of an EB-5 Project that helps immigrant investors decide where to invest to qualify for an EB-5 Visa. The immigrant investor, a financial and securities advisor, and an EB-5 Visa Attorney are all involved in the process of EB5 Due Diligence. 

Below are the types of Due Diligence on an EB5 Project.

  • Business developer due diligence
  • Project management due diligence
  • Financial due diligence
  • Regional center due diligence
  • Compliance review
  • Conflicts of interest review

Learn more on how to conduct EB5 Due Diligence.  

Which EB-5 Project is Best for Investors?

The best EB5 Projects are historically in the hotel and real estate industries. EB5 Visa Projects in hospitality have a high potential for capital repayment for EB-5 investors. The value of a hotel increases to a significant amount above the project cost after opening and reaching stability. EB-5 investors opt for real estate EB5 Projects because they are tangible investments that investors can physically inspect and serve as real collateral. Large-scale EB 5 Visa Projects lead to numerous, direct, indirect, and induced jobs to satisfy the eligibility criteria of the EB-5 Program. 

Read more on the Best EB5 Projects for foreign investors.

Which EB-5 Project Has the Lowest Rate for Investors?

An EB-5 TEA Project requires the lowest minimum investment. Investors need only a minimum investment of $800,000 for an EB5 TEA Project. EB-5 TEA Project investors additionally enjoy priority processing for their petitions and 32% visa set-asides out of the total annual allotment of EB5 Visas. 

What is an EB-5 Project?

An EB-5 Project is the outcome of the investments of foreign nationals seeking to qualify for the EB-5 Visa. An EB-5 Project has to generate at least 10 full-time US workers per investor and contribute to US economic growth to satisfy the requirements of the EB5 Program. An EB5 Project can be direct or regional center investments in TEA or non-TEA areas. 

The EB5 Visa is an immigrant program open to foreign investors who can invest a minimum amount in a US business. A successful EB5 Visa application grants foreign investors and their dependents an initial 2-year conditional permanent residence. An approved I-829 petition removes the conditions on permanent residence. Lawful permanent residence (Green Card) allows foreign investors and their dependents to live, work, and study indefinitely in the US.

When is the Best Time to Invest in an EB-5 Project?

The ideal time to invest in an EB 5 Project is before the submission of your I-526 petition. Form I-526 (Immigrant Petition by Standalone Investor) is the first step in the EB5 process and demonstrates that you have invested the minimum capital required to create at least 10 full-time jobs for U.S. workers. 

How Long Does it Take to Process an EB-5 Project Investment?

Investors expect between 29.5 to 61 months of processing for their I-526 petitions after investing in an EB 5 Project. Foreign investors must continue to satisfy the minimum investment and job creation requirements during their 2-year conditional permanent residency until their I-829 filing for lawful permanent residence (Green Card). 

What are the Advantages of an EB-5 Project?

Below are the top advantages of investing in EB 5 Projects for immigrant investors.

  • Direct path to US permanent residence. Immigrant investors are able to self-petition for an EB5 Visa, unlike other immigration routes. Investing in an EB 5 Project does not need any sponsorship from family members or employers. 
  • US Education and employment opportunities. Children of EB5 Visa holders are eligible for lower in-state tuition and education assistance as permanent residents. Permanent residents are allowed to work and study anywhere in the US without restrictions.
  • Economic benefits. Investing in reliable EB 5 Projects and working with the right EB5 professionals lets investors gain profits in addition to US permanent residence.

What are the Disadvantages of an EB-5 Project?

You should be aware of the following disadvantages when investing in an EB5 Project.

  • Risk to Immigration. An investment in an EB5 Project does not automatically guarantee a Green Card. The foreign investor must be able to prove that he/she met the minimum investment and job creation requirements until the filing of the I-829 petition to qualify for a 10-year Green Card.
  • Risk to the EB5 Investment. The EB5 Investment is considered at risk with no guarantee of repayment. Proper due diligence on EB-5 Projects minimizes huge losses for investors. 
  • Fraud schemes. EB-5 investors should perform thorough due diligence on EB5 Projects to ensure that the developer and regional center are authentic EB 5 entities and that the project is set to succeed.

Which Visa Holders are Eligible to Invest in an EB-5 Project?

Nonimmigrant US Visa holders who wish to obtain Green Cards are eligible to invest in an EB5 Project. A nonimmigrant visa is a stamp on the passport of foreign nationals that allows them to be in the US temporarily. Nonimmigrant visas with dual intent in particular are able to apply for the EB-5 Immigrant Visa without violating their status. Dual intent allows certain nonimmigrant visa holders to apply for US permanent residence legally. 

Here are examples of dual intent nonimmigrant visa holders that are qualified to invest in an EB5 Project.

  • H-1B Visa for specialty occupation workers.
  • L-1 Visa for intracompany transferee managers and executives of global companies.
  • O-1 Visa for individuals with extraordinary abilities and achievements in sciences, arts, education, business, or athletics.
  • E-2 Visa for foreign investors from countries with treaties of commerce and navigation with the US.

Is a Social Security Number Required to Invest in an EB-5 Project?

No, you need to get an EB-5 Visa first before getting a Social Security Number (SSN). A Social Security Number (SSN) is issued to US citizens, permanent residents, and temporary working residents. SSN is used as a national identification number for taxation and other purposes.

Is an EB-5 Project Investment Risky?

Yes, the investment must be at risk for you to qualify for the EB 5 Visa as per USCIS. The EB-5 Project Investment must remain at risk until the I-829 petition filing to demonstrate that you meet the job creation and minimum investment requirements of the EB 5 Program.