The Choice of EB-5 Project

The amount of capital EB-5 visa petitioners are required to invest in an enterprise is no small number. From the alien applicant’s perspective, a six- or seven-figure at-risk investment should be undertaken with caution and care. To this end, it’s imperative that EB-5 investors understand what sort of projects they can supply their requisite capital to such that they make an informed decision that maximizes their chances of successfully earning a green card.

As we note on our EB-5 investment options page, the category and location of enterprise an alien chooses will dictate the amount of capital investment needed. The vast majority of EB-5 investors, roughly 90 percent in total, choose to infuse their capital into regional centers, which require a $500,000 investment. Investment in targeted employment areas (TEAs) similarly requires $500,000. The third option is choosing to directly invest: an alien creates his or her own new commercial enterprise (NCE). Direct investment necessitates a $1 million investment.

Regardless of the type of enterprise, the main condition for successfully earning an EB-5 visa holds: the creation of at least 10 full-time jobs for qualifying U.S. workers.

But how, exactly, is an alien’s investment deployed once he or she supplies the requisite capital to the enterprise? What sort of enterprises are standard and allowed? In this article, we explore the types of projects EB-5 investors can choose to fund and give prospective applicants a starting point for choosing the project that’s best for them.

A Hotel? Motel? Holiday Inn?

Provided that the enterprise adheres to basic requirements that U.S. Citizenship and Immigration Services (USCIS) verifies during Form I-526 adjudication, an EB-5 investor has a range of options for the commercial activity the enterprise conducts.

Acceptable EB-5 projects comprise various business models, spanning an array of industries. Typical projects include:

  • Agricultural development (e.g., farms, wineries, etc.)
  • Casinos
  • Convention centers
  • Hotels
  • Manufacturing facilities
  • Medical facilities
  • Office buildings
  • Places of entertainment
  • Real estate (check out this article for EB-5 investments in commercial real estate)
  • Restaurants
  • Retail centers
  • Stadiums

Applicants choosing to directly invest in an NCE should recall that their active participation in the enterprise is required. (So it’s probably wise not to choose investing in a restaurant if you suffer from cibophobia.)

Making a Decision after Due Diligence

While it may seem that all investors need to do is choose the industry and commercial activity that suits their preference, the decision-making process is much more complicated. In fact, choosing the type of EB-5 project to invest in is arguably the most important choice an applicant makes. Why? Because not only does the project have to meet USCIS criteria, but the enterprise has to be a viable business that serves to create the 10 or more jobs required. And ultimately, an EB-5 investor’s permanent resident status hinges on the success of the project.

Accordingly, EB-5 investors should undergo preparatory due diligence before deciding where to invest their capital. The following questions serve as a point of departure for this crucial preliminary work.

General Investment Questions

  • How will the business create jobs?
  • What are the risks associated with the business?
  • Is the enterprise located in a TEA, thereby requiring a $500,000 investment?
  • Are there projected returns on the investment? (Note that these cannot be guaranteed, as such will effectively render the investment not at risk.)
  • Is the business plan for the project compliant with Matter of Ho?
  • What models can be used to forecast job creation?
  • Are any other EB-5 investors participating in the project? If so, how will the jobs created be divided?
  • Will funding not tied to EB-5 petitions be used on the project? If so, what is the source of this funding?
  • After obtaining permanent resident status, how will the investor extract him- or herself from the business?

Regional Center-Specific Investment Questions

  • How many other EB-5 investors are participating in the project? How will the jobs created be divided?
  • How are investors vetted before participating?
  • At what stage of the application process are other EB-5 investors participating in the business?
  • What are the industries associated with USCIS’s designation of the regional center?
  • Does the project require a Form I-924A?
  • What will happen to the investment and related fees in the event an investor’s Form I-526 is denied?
  • What are the credentials of the principals of the project?
  • Has the regional center or anyone in its leadership been involved in lawsuits or filed bankruptcies?

We’re Here to Help

The above due diligence questions may appear daunting to potential EB-5 investors, especially those who have no background in investing, business, or the specific industries they’re considering. At Zhang & Associates, we understand that our EB-5 clients walk through our doors with very particular sets of circumstances. Our experienced immigration attorneys are here to help guide you on the choices you make for your EB-5 visa petition. Contact us today.

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

Updated 06/09/2017