In the past three fiscal years, the immigration bureau has received a total of 39,443 I-526 applications, which also means that at least $19 billion has been invested in the U.S. economy through the EB-5 program. The choices for EB-5 investors are diverse. Selecting a project that meets immigration requirements is a crucial step in the EB-5 investment process. Before investing, investors should conduct extensive due diligence to increase their chances of obtaining a green card and the return of their investment principal. So, what questions should investors clarify before making an EB-5 investment decision? Let’s explore together:
1. Reputation of the Regional Center and Developer, and Experience in EB-5
It is important to understand who is using EB-5 funds to create jobs for American workers. Who are the responsible parties, and what qualifications do they have? Do they have a successful track record with EB-5 projects? Have previous investors in the projects received I-526 or I-829 approvals? After the I-829 approval, did the regional center return the EB-5 investment principal? If the job-creating entity has a manager, what is their professional experience?
2. Infrastructure, Oversight, and Management of the Regional Center and EB-5 Project
Do the regional center and EB-5 project developers have the necessary infrastructure to complete the EB-5 project? Do they have suitable staff, offices, and operational funds? Is there a system in place to regularly provide project progress reports to EB-5 investors? Does the EB-5 project have a mature management mechanism to provide adequate oversight, ensuring that funds are deployed and spent appropriately? Do the regional center and EB-5 project comply with relevant federal, state, and local legal requirements, including U.S. securities laws?
3. Financing of the EB-5 Project
If EB-5 financing is the only source of funding for a project, investors must understand that the project’s development and operational timeline will depend on the timing of the financing activities. If sufficient EB-5 funds are not raised, can the EB-5 project continue, and will the required jobs be created? Does the project have other confirmed sources of funding? What position do EB-5 investors hold in the financing structure? Do developers share the project risks? If the business fails, what collateral rights or assets can EB-5 investors obtain?
4. Job Creation
The EB-5 program is a job creation program that provides immigration benefits. If the EB-5 project does not create sufficient jobs for investors, they will not be able to obtain a permanent green card. Therefore, it is essential to clarify how many jobs the project is expected to create, whether the jobs are based on successful operations and company profits. If so, has construction on the project already begun, and how many direct or indirect jobs have been created?
5. Other Considerations
In addition to the questions mentioned above, EB-5 investors should understand the different types of EB-5 securities offerings available in the market. Is it a bond offering or an equity offering? Does the project have an escrow account, and when will funds be released from the escrow account? If the I-526 is denied, how will the principal be returned to investors? Is the project located in a targeted employment area that is controversial? Does the regional center comply with SEC investigations and regulations?