EB-5 FAQs
What Is EB-5?
EB-5 is a visa category that allows for immigration by investment into the United States. Under this program, a single investment can allow the investor, their spouse, and unmarried children under age 21 to receive a permanent visa (green card).
What is a qualifying EB-5 investment? $800,000 for TEA (Targeted Employment Area) projects; $1,050,000 for non-TEA projects. The investment project must create at least 10 qualifying jobs per EB-5 investor.
The EB-5 program is administered by United States Citizenship & Immigration Services (USCIS). Congress created the EB-5 program in 1990 to stimulate the U.S. economy. In 1992, Congress added the Regional Center Program, which sets aside EB-5 visas for participants who invest in commercial enterprises associated with regional centers designated by USCIS.
Why EB-5 Financing?
- Lower cost of capital: EB-5 financing is often less expensive than alternative sources of financing. This financial advantage allows for more resources to be allocated towards project development and operations, enhancing overall project viability and success.
- Flexible financing: EB-5 can be structured as either debt or equity. Investors tend to prefer a debt structure because it is considered lower risk and has a definitive exit. Developers often prefer equity because it is less expensive than private equity and also less dilutive.
- Attractive to Investors: National interest and rural projects often receive expedited processing.
- Enhanced Project Viability: Provides additional capital to ensure project completion.
What Is a Regional Center?
An EB-5 Regional Center is an entity designated by the United States Citizenship and Immigration Services (USCIS) to promote economic growth in a particular geographic area by sponsoring projects to raise EB-5 investment. Investing through a Regional Center can allow for indirect job creation calculations.
USCIS designates a regional center based on an application that explains how the regional center will promote economic growth in its area. To ensure that a designated regional center remains eligible, USCIS reviews its annual reports to verify that it has continued to comply with all applicable laws.
Over 90% of EB-5 visas issued over the past decade have been for applicants who invested through the regional center program.
What Is a TEA?
A Targeted Employment Area (TEA) is a geographic area that qualifies for the incentive of a reduced minimum investment amount. For EB-5 applicants who invest in a project located in a TEA, the required minimum investment is lowered from $1,050,000 to $800,000.
As defined by USCIS, a TEA can be a rural area or a high-unemployment area.
- A rural area means an area that is both not within the boundaries of a metropolitan statistical area, and not within a city or town with population of 20,000 or more.
- A high unemployment area is an area that has experienced unemployment of at least 150 percent of the national average rate.
USCIS specifies that the unemployment data provided to the public by the Census Bureau (through the American Community Survey) and the Bureau of Labor Statistics qualify as reliable and verifiable data to qualify a TEA using proper methodology.
IIUSA has a helpful tool to identify whether your location qualifies as a TEA.
What Qualifies as a Good EB-5 Project?
- Location: Investors strongly favor projects that are in Targeted Employment Areas (TEAs) in order to qualify for the lower investment threshold of $800,000. TEAs could be either rural or higher unemployment areas. Rural TEAs also benefit from priority processing.
- Shovel ready or under construction: This provides comfort to investors that the project is going ahead and that some jobs may already have been created.
- Not overly reliant on EB-5 funding: As a rule of thumb, investors prefer projects with less than 50% of the cap stack coming from EB-5.
- Owner equity: Investors like to see that the owner or developer has significant “skin in the game”
- Additional financing secured: Ideally the additional sources of financing, other than EB-5, would be committed. For example, is the senior loan committed, or is it the company relying on a term sheet. Similarly, if the project is using C-Pace funding, is that committed and escrowed?
- Viable exit strategy: A viable exit strategy at a defined date is important to investors, whether that’s through a loan repayment, refinancing or sale of the business. Investment timeline is typically 4-6 years.
What Are the Steps Involved in an EB-5 Capital Raise?
Initial Consultation: EB5 Coast to Coast provides an initial consultation to discuss the project’s eligibility and suitability for EB-5 financing.
- Project Assessment: Detailed evaluation of the project to ensure it meets EB-5 requirements, including location in a Targeted Employment Area (TEA) and job creation potential.
- Filing the I-956F: Submitting the project application to USCIS with all required documentation.
- Ongoing Compliance and Reporting: Regular monitoring and reporting to ensure the project remains in compliance with all EB-5 regulations, including quarterly updates and annual reports to USCIS.
Why Is Proper Compliance Important?
- Compliance ensures project success and investor confidence. The penalties for non-compliance are severe and can include debarment and investor denial.
- EB5 Coast to Coast’s compliance role includes the following:
- Initial Due Diligence and Onboarding: We review and provide feedback on all project-related documentation, including the I-956F, I-956H’s, I-956Ks, agent agreements, and more.
- Ongoing Monitoring: We check in quarterly during the first year of the project and at least annually thereafter to review compliance-related matters.
- Annual Reporting to USCIS (I-956G) which includes detailed information on project progress, job creation, agent fees, financial matters, and more.
- Audit Readiness: We collaborate with sponsored projects to prepare for USCIS audit
Is It Better to Rent or Buy a Regional Center?
This depends on the specific needs and long-term goals for the developer. Renting may offer flexibility and lower initial costs, while owning provides greater control and potential long-term benefits.
Why Work With Us?
EB5 Coast to Coast offers extensive experience and a robust compliance framework, facilitating a smooth and efficient process from start to finish.
USCIS
Approved
EB5 Coast to Coast owns multiple USCIS Approved Regional Centers approved to sponsor projects in 49 states.
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EB-5 Service
We offer competitive pricing and our comprehensive compliance service.
Track
Record
We sponsor dozens of projects with hundreds of investors.
