EB5 Investment process and timeline

What are the different EB-5 Investment options?

When it comes to investing your money, there are two options in the EB-5 process as set by USCIS:

1. Direct EB5: Investor is an entrepreneur with their own business having invested minimally $500,000 $900,000 in a targeted employment area (TEA, area designated by govt as area with high unemployment) otherwise $1,000,000 $1.8 Million. A direct EB5 investment requires that the investor run the business himself and create 10+ full time jobs (other than family) within two years.

2. Regional Center (RC): For passive investors, the more commonly used option is via the Regional Center EB-5 program. Regional Centers are specially designated entities approved by USCIS to pool and invest the EB-5 investors funds into new businesses commonly called EB-5 projects. The investment has the same limits as the Direct EB-5 option, i.e., $1M $900,000/$1.8 million in TEA/Non-TEA projects respectively. The investor is not involved in the day to day management of the EB-5 project.

Who are some of the key people I need to interact with prior to investing?

1. EB-5 Attorney (required): This is someone that will help you file various stages of your EB-5 application such as I-526, I-829, I-485 etc.
2. EB-5 Advisor (recommended): This is someone that can give you unbiased investment advice on your EB5 decision. A good EB-5 advisor has evaluated multiple EB-5 projects and is well aware of the ever changing rules of the EB-5 industry. Advisors ensure their clients receive all the pertinent details of a project to evaluate the risks and rewards of a particular project.
3. Regional Center General Partner/Manager/Director (required for Regional Center based EB5): This is someone who manages the Regional center. Investors should prepare and create a list of questions to discuss with the Regional Center representative and validate the responses with your investment advisor and lawyer. Talk to multiple Regional centers to do a comparison.

What are the key steps to the EB5 Process?

1.Selecting an EB-5 project
2. Subscribing as an investor to a project
4. Filing I-526 (Immigration petition for EB5)
5. Filing for conditional green card (CGC) either through consular processing (CP) or Adjustment of Status (AOS)
6. Filing I-829 to remove conditions before end of 2 years after receiving green card.
7. Getting investment back.

What are some risks related to the EB5 program?

1. Financial risk: Because EB5 programs require funds to be at risk, you could lose your entire investment.
2. Immigration Risk: Because US immigration policies restrict the number of visa applicants every year, you could see years or decades of delay before getting a EB5 conditional green card.
3. Timeline risk: Due to slow processing (I-526 takes 1.5-2.5 years to process for example) and visa retrogression, your minor dependents may age out.
4. Political risk: The EB5 program attracts a lot of political scrutiny and could be terminated or significantly before you get your green card.

What is an accredited investor?

Many RCs will only take investors that are accredited investors. The reason is that the regulatory overhead for RCs is lower when their investors are accredited. In the United States, to be considered an accredited investor, you must (prior to investing):

1. have a net worth of at least $1,000,000, excluding the value of your primary residence, OR
2. have income at least $200,000 each year for the last two years (or $300,000 combined income if married) and have a reasonable expectation of the same income level in current year.

Who are some of the key actors in a RC based project?

1. Regional Center (RC): The RC that is approved by USCIS as part of the EB5 program to promote economic growth.
2. New Commercial Enterprise (NCE): Typically a limited partnership with the RC as the General partner and EB5 investors as limited partners. Separate NCEs are created by the RC for each project so that it can be wound down after the project is completed and investors have completed their immigration process.
3. Job Creation Enterprise (JCE): The entity that will ultimately receive money from NCE to create jobs/economic growth sometimes known as the developer.
4. EB5 Investor: the investor invests $500k/$1M as a limited partner in the NCE.

What is a Project Exemplar and why is it beneficial for investors of RC projects?

Some projects apply for what is called an I-924 Exemplar approval. It means USCIS has pre-reviewed all the project documents and job creation methodologies. So, for each investor that files with that project, USCIS does not look at project documents for every investor. They only look at the investor’s individual documents for source of funds and background. It can decrease approval times, but takes a long time still to receive I-924 exemplar approvals. It’s only worth it to have if you have a big project. Most projects currently in the market do not apply for I-924 exemplar approvals, therefore USCIS must look at all the project documents for each investor as well as the source of funds information. Once a couple investors from a project are approved, USCIS only looks at investor section in the future.

Since there is significant effort and time (12-24 months) for exemplar approval to come through, many smaller projects usually skip this since they sell out before the exemplar approval would arrive.

When can I get my investment back?

There are two aspects to this: an immigration aspect and an investment aspect:

1. Immigration: The earliest you can get your money back is on the 2-year anniversary of getting your conditional green card. Technically, you can get your money back once you’ve filed you I-829 and the 2 years since getting your CGC has passed and don’t need to wait for I-829 to be approved though the cautious approach is to wait.

2. Investment: Typically, RCs have clauses that don’t allow you to get your money back until the immigration process is complete (or will have heavy penalties for early termination.) Additionally, they have a minimum period where you muist stay invested before you can get your money back. Investment periods of 5-6 years are most common though many RCs require longer lengths. This often means that you may have to wait many years after the immigration part is complete before getting your money back.

Also read our EB-5 Tutorial to understand the basics of the EB-5.

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