Benefits and Risks of EB-5 Investment Options

The tables below consolidate the basic advantages and disadvantages associated with choosing one option over for two EB-5 visa decisions: the type of enterprise to invest in and the capital requirement.

The Type of Enterprise

 

NEW ENTERPRISE

REGIONAL CENTER

TROUBLED BUSINESS

 

 

Commercial Enterprise Type & Location

Flexible—you can choose where and in what industry you want to invest; further, if you have a business in your home country, you can make your new business its subsidiary (or vice versa)

Limited—U.S. Citizenship and Immigration Services (USCIS) approves the businesses, and they’re usually in specific industries, including larger commercial establishments like malls or hotels

Inflexible—the business is already in existence, and it’s distressed

 

Business Plan

Required in application and must be approved

While to a certain degree already satisfied by virtue of USCIS pre-approval of regional centers, still needed to show job creation projections

Needed in order to substantiate the investment’s ability to preserve or create requisite number of jobs

 

 

Job Creation

Rigid—only direct jobs satisfy

Easier—direct and indirect jobs satisfy (induced jobs do, too)

Easier—investment must be shown to maintain or create jobs, or satisfy the numerical requirement of 10 through a combination thereof

 

 

Management & Control

A lot of control over the business and involvement in day-to-day management; further, if your business does well enough to expand it, you’re able to profit from your visa-earning activity

Considerably less control—the regional center itself performs the day-to-day management and makes all executive decisions; you’re a limited partner as the investor, whereas the regional center is a general partner

A lot of control over the business, and significant involvement in its day-to-day management

 

Processing Time

2-3 months longer than regional center petitions

2-3 months shorter than direct investment petitions by virtue of USCIS pre-approval

2-3 months longer than regional center petitions

 

 

Residence

Rigid—you’re required to live near the business, so if your business is located in a TEA in rural Alaska, you’re going to have to live in rural Alaska

Flexible—you can live and work anywhere in the U.S., so if the regional center is located in rural Alaska, you can live and conduct business from sunny Hawaii year-round

Rigid—in most cases, you must live in the location where the business is operating

 

Pros and Cons of Investment Amounts

 

NEW ENTERPRISE

REGIONAL CENTER

TROUBLED BUSINESS

 

 

 

 

Benefits of Investing
$500.000

  1. Being required to invest just half of the standard $1 million means risking less of your capital
  2. More control over the day-to-day operations for investors

 

  1. Being required to invest just half of the standard $1 million means risking less of your capital
  2. Removes the requirement of having at least 10 employees because the investment can count indirect or induced jobs
  3. No investor requirement to be involved in day-to-day management
  4. Investor can live anywhere
  5. Regional centers are already established, thereby lessening the risk to a certain degree
  1. Being required to invest just half of the standard $1 million means risking less of your capital
  2. Removes the requirement of having at least 10 employees because the investment can count preserved jobs
  3. Since the business is already distressed, investors can negotiate better terms
  4. More control over the day-to-day operations for investors

 

 

 

 

 

 

 

Drawbacks of Investing
$500,000

  1. Investment is made in atargeted employment area (TEA), which is a riskier location for investment, given structural issues like high unemployment that are characteristic of TEAs
  2. Investor must live in same location as enterprise
  3. If the business shutters within the two-year period, the investor may lose entire investment
  4. Investment must be shown to have created 10 or more jobs—and possibly more, if the investment serves to expand an existing business
  1. If the business shutters within the two-year period, the investor may lose entire investment
  2. Investor must convincingly demonstrate the creation of at least 10 jobs, whether direct, indirect, or induced
  3. Investment is made in atargeted employment area (TEA), which is a riskier location for investment, given structural issues like high unemployment that are characteristic of TEAs
  4. Investor is usually offered a management position as a limited liability partner, effectively ensuring the investor has little to no control over the day-to-day operations; further, the general partners are typically the sole beneficiaries of investments
  1. If the business shutters within the two-year period, the investor may lose entire investment
  2. Investor still must meet numerical job requirement
  3. Investment is stressed by virtue of being infused into an already distressed business which, on top of that, is located in an economically distressed TEA

 

 

 

Benefits of Investing
$1,000.000

  1. Investor has the option of investing in any type of enterprise located anywhere in the U.S.
  2. Because investment can be made in a business located in a place of the investor’s choosing, the investor can take pains to minimize the risk entailed
  3. Investor has more control over the enterprise’s day-to-day operations
  1. Removes the requirement of having at least 10 employees because the investment can count indirect or induced jobs
  2. No investor requirement to be involved in day-to-day management
  3. Investor can live anywhere
  4. Regional centers are already established, thereby lessening the risk to a certain degree
  1. Removes the requirement of having at least 10 employees because the investment can count preserved jobs
  2. Since the business is already distressed, investors can negotiate better terms
  3. More control over the day-to-day operations for investors

 

 

 

 

 

 

Risks of Investing
$1.000,000

  1. Significant, seven-figure investment may be cumbersome and risky for some investors
  2. If the business shutters within the two-year period, the investor may lose entire investment
  3. Investor must live in same location as enterprise
  4. Investment must be shown to have created 10 or more jobs—and possibly more, if the investment serves to expand an existing business
  1. Significant, seven-figure investment may be cumbersome and risky for some investors—investor could always find a regional center requiring an investment of only $500,000
  2. If the business shutters within the two-year period, the investor may lose entire investment
  3. Investor must convincingly demonstrate the creation of at least 10 jobs, whether direct, indirect, or induced
  4. Investor is usually offered a management position as a limited liability partner, effectively ensuring the investor has little to no control over the day-to-day operations; further, the general partners are typically the sole beneficiaries of investments
  1. Significant, seven-figure investment may be cumbersome and risky for some investors
  2. If the business shutters within the two-year period, the investor may lose entire investment
  3. Investment must be shown to have maintained 10 full-time jobs already in existence for a period of at least two years
  4. The business is already in distress, thereby enhancing the risk taken on by the investor
  5. Invest must live in same location as enterprise

 


For more detailed information about the EB-5 visa, refer to the following links:

Updated 06/09/2017