Unlocking Opportunities: Key Advantages of EB-5 Regional Centers

Updated: June 28, 2024

WRITTEN BY

EB-5 Insider Team

A group of professionals with years of experience helping people immigrate to the US

Note: This article is for informational purposes only. We are not providing legal advice or selling securities. The articles and content on this site are of a general informational nature only and should not be relied upon for individual circumstances.

One of the main decisions on your EB-5 journey is choosing a direct investment or working with a regional center. The EB-5 Immigrant Investor Visa requires applicants to invest $800,000 or $1,050,000 in a qualifying project. This capital must remain at risk for at least two years.

The EB-5 Program aims to stimulate the U.S. economy and promote job creation. Every EB-5 investor is required to create at least ten jobs. This requirement is why many investors choose regional centers, as the ten jobs can come from indirect sources.

By comparison, a direct investment requires the investor to create at least ten jobs directly within the company. Investors who choose a regional center project are more likely to meet this requirement and acquire permanent residency.

We’re examining the benefits of choosing a regional center project and what to consider when deciding where to invest for an EB-5 visa.

What is a Regional Center?

A regional center is a private or public economic entity approved by USCIS to sponsor EB-5 projects. These projects typically focus on real estate developments and utilize funding from multiple EB-5 investors, reflecting their more significant scale.

EB-5 investors prioritizing residency over investment management should focus their search on regional center projects. A regional center can apply for formal designation with a Form I-924, allowing them to work in a specific geographical area and within specific industries.

The regional center must also use specific economic methodologies to determine the indirect job creation numbers. When applying for determination, a regional center may also submit an I-526 exemplar petition for pre-approval of the project.

EB-5 investors who choose regional centers are more likely to meet the program’s requirements and achieve green card status.

The Role of Regional Centers

Investing in a regional center project puts your application at an immediate advantage. When applying for an EB-5 visa, you must file a Form I-526. Regional centers file an exemplar petition detailing the project with a business plan and job creation estimates.

Investing in a regional center means a large portion of your Form I-526 has already been approved. USCIS will instead focus on your source of funds, including their pathway and legality.

The EB-5 Reform and Integrity Act (RIA) introduced a requirement that regional centers be audited at least once every five years. This audit includes reviewing required documentation and the flow of investor capital into projects.

Part of this new regulation included creating the EB-5 Integrity Fund. Regional centers are now charged an annual fee to finance the program, which facilitates the auditing and general administration of the EB-5 Regional Center Program.

Direct Investment Opportunities

Comparatively, a direct investment is any investment made by an EB-5 investor into a project that isn’t connected to a regional center. An EB-5 investor can start a new business, purchase an existing one, or invest in a current one. Direct investments’ main benefit is that they give investors more control. This option is best for EB-5 investors wanting to continue their project or company after residency. Direct investments require more hands-on involvement from investors. Alternatively, investors in regional centers have limited control, making it a better option for investors not interested in operating a company.

Pros and Cons of Regional Centers

Job Creation

Most EB-5 investors choose to work with regional centers as it’s easier to meet the job creation requirement of 10 full-time jobs for qualifying U.S. workers. Unlike direct investments, regional centers can count direct, indirect, and induced jobs towards the total using economic analysis.

The main benefit of regional centers is the ability to count indirect and induced jobs towards the job creation requirement. Indirect jobs are created because of the capital invested in the project. Comparatively, induced jobs are created within the wider community, usually due to capital spent by workers involved in the EB-5 project.

Indirect jobs will be considered within the business plan and calculated using economic analysis. USCIS will evaluate these calculations when the regional center approves the project.

Capital ‘At Risk’

Regional center projects typically deposit investors’ capital into an escrow account, which is held until the investor’s I-526 petition is approved. An escrow account enables investors to satisfy the requirement that their funds remain at risk for at least two years.

Involvement in Day-to-Day Operations

EB-5 investors are not involved in the daily operation or management of regional center projects. While they may be involved at a board level, they won’t need to commit much of their time to the project. However, this lack of involvement is why fraud cases have previously been able to occur. Engaging with an immigration attorney and business advisor can help you do your due diligence to choose the most suitable regional center project. The regional center’s track record is vital to show it can execute its business plan.

Minimal Financial Return

The main disadvantage of regional center projects is that they’re unlikely to create a meaningful financial return for investors. However, most EB-5 investors consider regional projects as an investment in their residency. Therefore, they don’t prioritize making a monetary return on their investment.

Not Geographically Restricted

If an EB-5 investor chooses direct investment, they’ll often have to live or spend significant portions of time in the area where their company operates. Regional center projects give EB-5 investors the freedom to live and work anywhere instead of being tied down to a geographical location.

This benefit of a regional center is ideal for EB-5 investors utilizing the program to obtain a green card for themselves, their spouses, and qualifying children (unmarried and under the age of 21).

Pros and Cons of Direct Investment

Job Creation Requirement

EB-5 investors who choose direct investment projects must create ten full-time positions directly employed by their company and submit a Form I-9 with evidence of each employee.

It’s important to note that this requirement applies to ten full-time roles. While job-sharing is allowed and counts as one job if split between two employees, part-time jobs do not qualify for the job creation requirement. Positions where an employee is fired or quit and replaced by another employee count as one job, not two.

Return on Investment

While regional projects are unlikely to create a return on the investor’s capital, direct investment projects offer unlimited potential. Investors who choose direct investment often want to develop the company after residency, focusing on the project’s long-term earning potential.

Regional center investors prioritize the ease of these projects and the increased likelihood of obtaining a green card in exchange for a minimal return. If you’re an entrepreneur with a solid business plan, direct investment may be the preferable option as a win-win. It’ll allow you to obtain a green card and establish a business to grow further.

What to Consider When Choosing Your EB-5 Investment Project

One of the first decisions any EB-5 investor will make is determining which project to invest in. You may decide to start working with a business advisor or an immigration attorney before making this decision. They can offer advice and guidance on suitable projects and their potential to meet the job creation requirements.

Investors can choose between a regional center project or making a direct investment. The goals of every EB-5 investor are different. If residency is the priority, most investors will choose the safer option of a regional center project.

Recent regulatory amendments have increased oversight of regional centers, providing potential investors with further peace of mind. A direct investment project may be suitable if you want more control over your investment and a higher earning potential.

Job Creation Requirement

When choosing a project, the most important thing to consider is its potential to meet the job creation requirement. The EB-5 program requires at least ten full-time jobs to be created for each investor. An EB-5 visa applicant cannot obtain permanent residency if their project fails to meet this requirement.

When choosing a regional center project, one thing to consider is its ability to create the necessary jobs for every investor. Most immigrant attorneys and business advisors recommend choosing a project whose business plan provides a cushion for job creation, usually earmarking at least 12 jobs per investor.

Set-aside or Reserved Visas

RIA introduced set-aside visas, with 32% of EB-5 visas for each fiscal year reserved for projects that meet specific requirements. Set-aside visas effectively allow applicants from high-demand countries like India and China to speed up their application process. Every country has a 7% visa cap, resulting in a backlog of applicants from certain countries.

The introduction of set-aside visas is a win-win for the economy and investors. Rural, TEA, and infrastructure projects mean foreign investment can be directed at parts of the U.S. most needing economic support. Conversely, it proves a faster route for investors from countries with more applicants.

Twenty percent of EB-5 visas for every fiscal year are now set aside for rural areas, 10 percent for areas with high unemployment, and 2 percent for infrastructure projects. Many regional center projects are now focused on these areas, as they also have a lower investment requirement of $800,000 than $1,050,000.

There’s no way to guarantee that these set-aside visas will continue at their current level, but they significantly benefit investors who choose regional center projects.

How to Practice Due Diligence for Regional Center Projects

Due diligence is crucial when choosing which project to invest in for an EB-5 visa, especially for regional center projects. Here are pro-active steps you can take to select the most suitable regional center for your EB-5 project:

  • Confirm its USCIS designation. You can do this by requesting a copy of its designation letter or checking the list of approved regional centers on the USCIS website.
  • Request receipts of I-924A filing to ensure the regional center is compliant with annual reporting requirements set by USCIS.
  • Conduct background checks on the management of the regional center.
  • Inquiry on the success of previous EB-5 investors involved with the regional center on other projects.

Choosing a Project for a Set-Aside EB-5 Visa

The introduction of set-aside visas means that EB-5 applicants in countries that frequently hit the 7% country allocation will focus their search on regional center projects that qualify for these visas.

Ten thousand visas annually are now set aside for qualifying investments. These reserved visas are divided into:

  • 20% for rural projects
  • 10% for projects in areas of high unemployment
  • 2% for infrastructure projects

Allocating 32% of visas to these qualifying projects provides a significant incentive for investors to direct their investment to these projects for faster processing times. It can save EB-5 investors years on their application process.

Set-aside visas mean that EB-5 investors already residing in the U.S. can also benefit from concurrent filing to further speed up their application process. Investors in the U.S. under a non-immigrant visa can obtain their conditional green card fastest when choosing a regional center project that qualifies for a set-aside visa.

Become a Permanent U.S. Resident Through Investment

One of the first steps you’ll take on your journey to becoming a permanent U.S. resident through investment is to choose your project. An EB-5 visa is the most efficient way to achieve permanent residency and U.S. citizenship if you have the capital to make the required $800,000 investment.

At EB-5 Insider, we work to simplify your path to U.S. residency and citizenship through investment. Our team will help you obtain a permanent U.S. green card for yourself and qualifying family members for an investment of $800,000.

Start applying for an EB-5 visa today, or contact our team for more information.

Ready to get started with EB-5?

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments