What is the success rate of an EB-5 visa to the USA? Are the projects safe enough to invest in?
USCIS hasn’t shared the success rate of EB-5 Visas in a while. But based on past data from USCIS, the success rate of approval of I-526 petitions (The 1st step of the EB-5 process where in the investor gets a conditional green card after 526 approval) is around 80%. After 22 months of receiving the conditional Green card, the EB-5 petitioner can apply for an I-829 (permanent green card). The success rate of this was around 95% in the past.
The success rate of an EB-5 visa depends on two factors:
The EB-5 project. Was the project completed according to the proposed plan using the investors funds. Did the required number of 10 jobs per investor get created.
Another area to be careful about is the investor’s statement of funds. This includes the source of funds and the documentation for the source of funds. They need to be very well documented in order for the success of the investor’s 526 petition.
An EB5 project has the same risks as any new business venture has. There is the risk of the project getting delayed, having cost overruns, rule changes impacting the project, etc. Apart from these, unique to the EB5 project is the fact that 10 jobs per investor also need to be created for the success of the EB5 project.
So what makes an EB5 project safe? There is no straight answer, but due diligence on the investor’s part can mitigate some of the risks.
Check the background of the principals of the regional center (RC) & the Project. What is their experience? You can ask the RC for this information.
The nature of the industry the project is in. For eg., a Hotel in a major city would be a far more viable project than a Hotel in some small town with a population of 1000.
Find out about the senior loan to the project, what is the collateral against it, what is the rate of interest? Where in the payback schedule does the EB5 investment fall in line? If it’s a hotel or a rental model unlike a sales model, how will the EB5 funds be paid back in 5 years, since the project wouldn’t have had sufficient revenues to pay the investors back within 5 years?
Find out the percentage of EB-5 money in the capital stack and where the other capital money is originating from. Consider the developer’s incentives. For eg., Does the developer have his own investment funds in this project? If so, how much? Basically, does the developer have skin in the game?
How much of a buffer does the jobs cushion have? Instead of the required 10 jobs per investor, how much jobs buffer is the Project providing?
These are just a few things affecting the Project’s success. Contact us if you are interested in a project that checks all the boxes? Get in touch.