EB-5 Direct Investment, is it Right for You?

Although the regional center program is currently on hold, it’s still possible to apply for an EB-5 visa, so long as it is a direct investment. With a recent court ruling lowering the capital required for an EB-5 visa some potential investors may be considering the direct investment route. However, while direct investment is certainly a tempting opportunity it isn’t the right option for everyone.

What is a Direct Investment?

As you may already know, the EB-5 program offers foreign nationals a path to acquiring permanent residence in America in exchange for investment into a new commercial enterprise (NCE), and the creation of 10 full time American jobs. NCE is a term used to identify the business entity in which the EB-5 investor is investing their capital. There are no restrictions on the structure or industry of business for a NCE, so long as it is a for-profit business.

When the EB-5 program was originally created in 1990, direct investment was the only route available for EB-5 investors, however in recent years regional center investments have surpassed it in popularity. Regional centers pool capital to create a NCE using capital invested by a large pool of EB5 investors. These investors will usually not be involved in the day-to-day operations of the NCE. On the other hand, direct EB-5 investors typically plan to own and operate a new business themselves in order to qualify for an EB-5 visa.

What are the Differences between Direct and Regional Center Investments?

As you might already be able to tell, the biggest difference between direct and regional center EB-5 investments is the involvement required of the investor.

Although USCIS requires that a regional center investor be “active” in the management of the NCE, this requirement is usually met by making the investor a limited partner in the NCE. Regional center investors typically take on these limited partner roles, voting on major business matters and involving themselves in policy decisions.

In contrast to the role regional center investors play, Direct EB-5 investors generally manage the day-to-day operation of the NCE themselves or through subordinate employees.

Another important difference between direct and regional center EB-5 investment is the job creation requirements investors must meet. USCIS requires investors to demonstrate that their investment created at least 10 full time jobs in order for investors’ temporary green card to become a permanent one. Meeting this requirement is much easier for regional center investors, as they can cite 10 full-time direct, indirect or induced jobs that were created with their investment.

This provision does not exist for direct investors. In order for a direct investor to meet USCIS job creation requirements, their NCE will need to directly hire 10 full time employees.

Benefits of Direct EB-5 investment

While the more hands-on approach and stricter requirements of direct investment lead most potential EB-5 investors to choose the regional center route, direct investment certainly has its own advantages for investors.

First and foremost is the potential return on investment. Although investing in a regional center’s NCE does have the potential for a profitable return on investment, that generally isn’t the priority for their investors. Regional centers are focused on ensuring that their investors will be approved for and receive their EB-5 visa, investors making a substantial profit is a secondary concern. Direct investment offers investors much higher potential profits on their investment, as they will be directly controlling and managing the business they created

Another benefit for direct investors is control of assets. While regional center investors are usually contributing to the construction of a large commercial project, they’re likely to only be share-holders meaning they don’t have any real control over the project’s assets. As we mentioned earlier, direct investors are usually opening their own businesses, which means they’ll own and control the business and its assets.

Which is the Better Option?

It might be tempting to designate one EB-5 investment route as a “better” or “worse” option than the other, but the reality is that the answer depends on what an individual investor’s goals are.

For investors whose focus is entirely on acquiring a green card for themselves and their immediate family with as little hassle as possible, the regional center program will almost certainly be the best option. Often these investors have already immigrated under a different visa category, have established lives and careers in America, and are applying for an EB-5 because it is the fastest route available for families to acquire a green card.

However, other potential EB-5 investors may want more than just a green card, they want the opportunity to become an American entrepreneur and create their own business. Direct EB-5 investment provides investors with that opportunity and rewards their efforts with the right to permanent residency in America and all the benefits that entails.

Get Started Today

Direct EB-5 investment certainly isn’t for everyone, but for those who want to build their own business in America, it is an unmatched opportunity, and right now is the best time to start the process. Not only are direct EB-5 investment requirements only $500,000 (provided that the investment is in a TEA), but with the regional center program on hold USCIS is only able to process EB-5 petitions for direct investments. This could potentially result in direct EB-5 investors petitions to be adjudicated more quickly than usual. Fill out our quick-free EB-5 evaluation and start your journey to permanent residence in America today.

Source

Leave a Reply

Your email address will not be published.