August 23, 2020
Selecting an EB-5 investment? Five things you need to know
Out of the limited opportunities that one has to immigrate to the United States, the following could qualify as some avenues :
• You marry a US Citizen, or
• You have a close family member sponsor you, or
• You have a company sponsor your’ Green Card’ for a unique skill set, or
• You invest in the United States
The EB-5 visa is for investors who are willing to invest USD 1.8 million into a business in a non-targeted employment area or USD 900,000 into a targeted employment area (TEA). You must, in addition, create at least 10 permanent full-time jobs for qualified US workers.
If you have the means, this route is one of the best ways to migrate to the United States & acquire permanent residency & subsequently US citizenship. The trick is selecting a profitable investment that will satisfy USCIS requirements.
Below are 5 things you should know before you commence your process of obtaining an EB-5 visa :
1. There are 2 types of investments USCIS permits
For an EB-5 investment, USCIS permits 2 types of investments – direct & indirect. With the direct investment route, you are in full control of the business as an investor & manager, as long as you invest a minimum of USD 1.8 million & your new company employs at least 10 people who are US citizens. If you can do this & meet other application criteria, USCIS will approve your petition. The indirect investment route is different. Here, an approved EB-5 center pools resources from multiple investors to do a large project (the projects are usually in the real estate sector, though other projects are not uncommon). You must invest a minimum of USD 900,000 in the project. A significant difference in this route vis-à-vis the direct investment route is that here you play a passive investor role & are not responsible for running the business.
2. Each option has a different risk vs. reward calibration
One can think of these 2 options (direct vs. indirect route) as stocks versus options. With an individual stock (direct route), you can either lose it all or make it big. However, with mutual funds, since your money goes into many different stocks as part of a managed portfolio, you assume less risk but typically receive less reward.
Similarly, EB-5 center investments are not usually for making the most money possible. They’re more about satisfying the requirements for immigration, so some of these projects may have lower returns than other investment opportunities.
3. Investment amounts will become higher
As part of the changes that USCIS implemented on 21 November 2019, investment amounts, in future, will keep changing in line with inflation every 5 years. Therefore, if you are considering an EB-5 investment, it would be best to do so before investment limits recalibrate (increase) & you have to put in more money.
4. Look for EB-5 Center projects with at least one I-526 approval
Filing Form I-526 – “Immigration Petition by Alien Entrepreneur” is the 1st step in the EB-5 process. In this form, you must document the project & your source capital, including how many people the business will employ, how it will operate & more questions along those lines.
With EB-5 centers, the questions regarding the project itself remain constant across all applications. Therefore, when USCIS approves one I-526 request, they tend to refer to that approval for subsequent applications. Some centers file an exemplar I-526 to give future investors confidence that the project will withstand USCIS scrutiny.
5. Real estate projects have a distinct edge
Many EB-5 centers work with real estate projects because they have an edge with USCIS. Construction requires significant investment & lots of jobs, both of which are what USCIS likes to see. The advantage of real estate projects is that as long as you spend the budget, you’ll create jobs. If you go the direct investment route, you might put in a much higher investment amount than the required USD 1.8 million into your business but yet fail to bring in enough revenue to hire 10 employees for at least 2 years. In this case, you will have immigration issues.
In conclusion, an EB-5 investor must weigh their options. If you want the least amount of risk, a reasonable return on investment & a higher chance of obtaining your green card, consider investing in an EB-5 center project. However, if you are willing to take on more risk for a more significant ROI, you can always invest in your own business. The choice is yours. With the right guidance, though, both paths will lead to a ‘Green Card’ in the end.
Source : forbes.com