OVERVIEW OF THE EB-5 VISA PROGRAM:
The Immigrant Investor Program, commonly known as “EB-5”, was established in 1990 to stimulate the U.S. economy through job creation. This program, overseen by the USCIS, allows foreign nationals to obtain lawful Permanent Residence in the United States by making a capital investment that creates a new commercial enterprise or revives a troubled business, thereby creating jobs for U.S. workers.
Each unit of investment must create or preserve 10 jobs. As a reward for this investment foreign nationals are granted visas for themselves, their spouse and any children under the age of 21.
Two distinct paths are available for EB-5 investment: the Basic Program where the foreign national invests directly in a U.S. venture, and the Regional Center program, which provides indirect EB-5 investment opportunities for foreign nationals.
Both programs require that the investor make an “at-risk” capital investment of either $500,000 or $1,000,000 in a commercial enterprise located within the United States (Required investment is dependent upon geographic location of the business).
EB-5 Capital can be used effectively for Real Estate development projects. If used selectively and appropriately, EB-5 can lower a project’s overall cost.
WHAT IS A REGIONAL CENTER?
Regional Centers were created to identify projects and provide EB-5 visa applicants with investment opportunities that fulfill all USCIS requirements and create the required jobs in order to secure visas for the EB-5 investors.
A Regional Center is defined as any economic entity, public or private, which is involved with the promotion of economic growth, improved regional productivity, job creation and increased domestic capital investment. The organizers of a Regional Center must seek the “Regional Center” designation from USCIS via an I-924 petition/application.
ADVANTAGES OF THE REGIONAL CENTER PROGRAM:
The Regional Center Program carries considerable advantages for investors over the Basic Program (also known as Direct EB-5).
Direct EB-5 requires foreign nationals to invest in a project over which they exert managerial control, while in the Regional Center context, investments are passive and do not require the investor to manage their investment or the company on a day-to-day basis.
Additionally, jobs created both directly and indirectly as a result of a Regional Center project may be counted towards the job creation quota, while with the Basic Program, only jobs created directly by the investment may be counted.
Because of these inherent advantages over 90% of EB-5 investments are made through Regional Centers.
Note, that the organizers of a Regional Center must apply for and be granted “Regional Center” designation from the USCIS. AscendAmerica is a USCIS designated Regional Center.
HOW THE REGIONAL CENTER WORKS:
Foreigners invest in a Limited Partnership created by the Regional Center operator and maintain all the rights generally accorded to limited partners. The Limited Partnership then invests (via equity or debt) in a job-creating project. All direct employees of the project as well as employment indirectly created or induced by the investment apply toward the job creation requirement.
Example: Regional Center-Sponsored Investment in the Construction of a Hotel
Foreigners seeking permanent residency in the U.S. invest in a LP created by a Regional Center
LP provides mezzanine loan to Hotel Developer
Construction and operational jobs – as well as the jobs created by the ripple effect that the construction and operation of the hotel has on the regional economy – apply toward the 10 jobs/investor requirement
HOW THE EB-5 PROGRAM BENEFITS U.S. PROJECT OWNERS AND DEVELOPERS:
Foreign nationals invest in U.S. based projects through Regional Centers with the goal of securing a “Green Card.” The typical investor has a high net-worth and is willing to forego the traditional financial return on his/her immigration investment provided he/she is confident that the project is likely to create and sustain the required jobs to yield them an unconditional green card.
The timeline from investment until procurement of unconditional green card is typically 4 to 5 years. Accordingly, project owners and developers with excellent track records and reputations are able to secure 5-year loans (senior, junior or mezzanine) or preferred equity at rates/returns far below traditional sources.
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For official information regarding the EB-5 Program, please visit the EB-5 Immigrant Investor web page.