Among the many ways to immigrate to the United States, investment immigration through the EB-5 program is the most common. While EB-5 investments are free from fraud risk, as with any investment project, there may be commercial and operational risks. The following due diligence is essential.
Understanding the background of the Regional Center: Regional Centers must be approved by the immigration authorities. Currently, there are over 600 Regional Centers in the United States, with two-thirds established after 2012, particularly seeing a surge in growth in 2013 and 2014. It is recommended to choose a Regional Center with a longer operating history, as this ensures they have extensive experience in project fundraising. Furthermore, established Regional Centers allow for the review of their historical approval rates for I-526 and I-829 petitions.
Background of the project borrower: For instance, projects where a publicly traded company acts as the borrower are generally well-received, as publicly traded companies provide public information and greater transparency.
Investigation of project capital structure: We generally recommend that EB-5 funds account for 20%-30% of the total project funding, and certainly no more than 40%. The proportion of cash invested by the project developer is an important guarantee of the project's overall safety. Projects that are highly dependent on EB-5 funding to launch carry certain inherent risks regarding their security.
Investigation of project job creation surplus: When submitting an application for a permanent green card, the immigration authorities mainly examine two points: first, that the investment remains in an active investment state; and second, that each investor must create 10 jobs. Therefore, the job creation capacity of the project must also be examined. For example, if a project has 66 investors, it must create at least 660 jobs. If the project can only create exactly 660 jobs, it is relatively risky; if the immigration authorities conduct a strict review and some positions are not accepted, it may result in some investors failing to immigrate successfully. Therefore, it is necessary to examine the "job creation surplus," and we generally recommend a surplus of around 30%.
Assessment of collateral: When investing in EB-5 projects, there are generally two investment models: debt investment and equity investment. We need to conduct professional due diligence on the collateral, such as tangible real estate or land mortgages, as well as intangible assets like stocks or bonds, to determine the actual value of these assets.