What is a regional center?
A regional center is an entity that has been approved by and has received licensure from the USCIS to accept funds from EB-5 investors to sponsor qualified projects inside of the EB-5 program.
Regional centers do not directly receive funds from investors, but rather serve as a platform to host projects. Funds are placed in an escrow account that has been set up specifically for that project.
Find the USCIS EB-5 Regional Center definition here.
Overview of the EB-5 investment process
The EB-5 investment process requires that $500,000 Targeted Employment Area (TEA) or $1,000,000 (non-TEA) investment monies are invested into a Regional Center (Escrow Account). United States Customs and Immigration Services (USCIS) must have approved the regional center and all investments must be considered to be “at risk” for the duration of the investment.
USCIS requires that regional center investors must create at least 10 full time jobs as a direct result of their investment. Job creation is one area where involvement with a Regional Center is beneficial to the Investor as they are responsible for creating and reporting job creation for the investor. The Regional Center will track and create both direct and indirect jobs for you.
The EB-5 program has grown in popularity over the past several years, in part because of its functionality and strong appeal to investors. This process allows investors to receive their green card rather quickly.
EB-5 investors are passive investors, and are not required to live near their investment. EB-5 involvement offers flexibility that is appealing to many types of investors under this type of Visa program.
Please explain the EB-5 “loan model” versus the “equity model”.
The equity model pertains to projects that provide ownership in a business or a property. When a new project is created, EB-5 investors form a limited partnership with the regional center. The invested funds are used to obtain and develop property or to invest in a start-up business.
In the Equity Model, Investors are limited partners who have ownership shares in the project as a passive investor.
The Loan Model involves invested funds that are loaned to a borrower for starting an EB5 regional center project. Investors and a regional center create a limited partnership that loans money to a borrower.
Interest is accrued on this loan and is paid back according to the terms defined in that projects business plan.
Who should use the EB-5 Regional Center to immigrate to the United States?
EB-5 is most suitable to investors who do not want to actively manage a business in the US and who may wish to continue to operate a business that remains in their home country.
EB-5 is popular with parents who would like for their children to immigrate. Many times parents will gift money to their children to allow them to come to the US, go to school, work, and establish residency here.
In addition the EB-5 program is a valuable option for investors who want to send their spouse and children to the US, while allowing the “breadwinner” of the family to stay in their home country – traveling back and forth to the US as a tourist. By not establishing residency, they are able to avoid tax implications inside of the US
Can you explain the path to citizenship through the EB-5 process, and how does it work?
To receive citizenship through the EB-5 process, the investor must first receive their initial green card by filing an I-526 petition through their attorney, then after two years they can file for a permanent green card by filing an I-829 petition through their attorney.
When the investor has had their permanent green card for 5 years, they are then usually eligible to file for their passport and citizenship as long as conditions set forth by the USCIS have been met.
One requirement for applying for a passport is a “Physical Presence Test”. A Physical Presence test requires that the person applying has, during the previous 5 years been physically present in the US for at least 2.5 years combined as well as having proof that at least 10 FT jobs have been created as a direct result of their investment.
If the investor or their family members were in the US for a little less than 2.5 years they may have to wait a little longer after the 5 year period in order to accumulate the required minimum number of days in the US. At that point the investor and their family are ready to apply for citizenship
Is it possible for the person whose assets are registered (used) to not establish residency but the other family members can?
Yes. This is a very common scenario. It is also an effective tax planning technique. The person, whose assets are invested, does not file as part of the petition and if they stay here less than 6 months per year they are not subject to US taxes.
If their situation changes, and the investor is ready to join their family and receive residency, it is a simple process for them to file a petition. During this process they can gain residency in approximately 6-8 months.
Once the investor gains residency can they continue to do business in their home country?
Yes. Once residency is established they can have a business in their home country and also continue to have assets and income overseas. Tax planning then becomes a very important consideration. It will become important to speak with a qualified tax accountant prior to doing that, and to structure things in a way that will minimize tax obligations.
What are some of the aspects of the MD-ALPHA project that are appealing to investors?
The principals and staff at Capital Data Centers’ MD-ALPHA facility have strong technical and business backgrounds. There is a comprehensive business plan that is fully compliant with EB-5 requirements. The property has already been purchased, and there is strong support from local authorities – the city, county and state. It is located in a TEA zone, and thus the investment required is only $500,000.
In addition, job creation is very robust and this project is targeted to create 20% more jobs than is required.
Find out more about the USCIS EB-5 job creation requirements for investors.
Should an EB-5 investment be made now?
MD-ALPHA’s Data Center project is ready to start accepting investors at this point; we strongly encourage investors to not delay, as there are limited investor opportunities available. The US Government has also indicated that changes to the EB-5 program will be up for review; these changes include items like increasing the investment fee amounts and reevaluation of the definition of a Targeted Employment Area (TEA) that currently have the $500,000 investment amount.
We strongly believe it is to an investors benefit to take advantage of the current conditions within the program, because it is safe to say, that in the future it will be less advantageous to investors.
Is the EB-5 investor allowed to own property in the US?
An investor possessing a green card can purchase property in the US. One benefit of having a green card regarding the purchase of property in the US is that it can allow for better financing or loan rates.
Can an EB-5 investor conduct business in the US?
Yes. Once an investor has a green card it grants them all of the rights and privileges that an American citizen has, they can work wherever they choose.
What is the current investment amount that an investor must bring into the project?
The investment amounts are $1 million and are $500,000 if the Regional Center’s project is in a Targeted Employee Area (TEA).
What if the investor’s application is rejected?
If the investor’s application is rejected, the invested amount will be returned within a reasonable amount of time.
Find out more about the EB-5 Visa application process from the USCIS.
What territory does the Washington American Regional Center cover?
This regional center is based in Washington County, Maryland and will also cover the surrounding counties in both Maryland and Washington D.C.
What are some proposed changes to the EB-5 program that may be on the horizon?
In 2015 there were proposed changes to increase the investment amounts, changes to how job calculations are performed, and how TEA areas are defined.
What is expected is that the minimum investment amount of $500,000 would increase to at least $750,000, and the $1 million investment would increase to at least $1.2 million.
Are there additional expenses expected from the investor?
Yes. In addition to the principal investment amount of $1 million or $500,000 there will be administrative fees, attorney fees, and filing fees for the USCIS and United States. The additional costs associated with EB-5 investments will vary by project.
Are all of these fees predetermined? Are there additional fees if the case is more complex?
Fees are all predetermined, although filing fees might change in the future. At this point, the initial filing for the conditional green card is $1,500 for the petitioner and all family members that may be accompanying them.
What happens to the investment funds that are brought into the US?
Funds going into a project must be considered “at risk”. At risk funds mean that the funds must be injected into the selected project and used for qualifying expenses.
As long as funds are invested pursuant to the requirements of the business plan, that business plan is then used by USCIS to review and ensure that the funds are invested accordingly.
The investor is repaid according to the timeline detailed in their projects Business Plans.
What type of documents do investors need to provide?
All investors need to provide basic demographic info about themselves and family members accompanying them. A passport, birth certificate, and documents showing proof of the path and source of funds that are being used to invest will be needed.
Items that the USCIS looks for in availability of EB-5 documents.
Does the investor need to show all of their assets?
No. All that the investor really needs to show are the assets totaling the amount of the investment and the fees.
Is the investment amount taxed in the US?
No. Funds that are brought into the US before a person becomes a resident are not taxable.
Talking to a tax attorney or tax accountant for tax planning purposes is recommended. There are a number of completely legitimate ways to minimize tax obligations prior to arriving in the US as a resident.
Is the investor required to live in the US after receiving their green card?
Yes, they are expected to maintain residency in the US. A requirement for applying and receiving residency and a passport is maintaining a physical presence in the US. The USCIS mandates that out of the 5 years a person has been in the US with a green card that they must have been in the US for at least 2.5 years of that time in order to receive a passport and citizenship.
Is the investor allowed to travel freely back and forth out of the US?
Yes. That is the advantage of the green card – travel is allowed. If the investor does know in advance they will be spending a lot of time out of the US, they can file for what is called Advance Parole.
Advanced Parole is a notification to the government that they will be gone for an extended period of time, and that they are planning to return to the US and maintain residency. They are fairly liberal about the transition period.
How long does it take for the investor to get their green card?
This is a two-phase process. Once the documentation is ready and the petition is filed, the waiting time for initial approval is approximately 12 to 15 months.
Once approved – and if the investor and/or their family are living in the US – an adjustment of status can be applied for. The documents will then be sent to the US Embassy in the investor’s home country, this process will take an additional 2 to 3 months.
A one time EB-5 Visa will then be issued, this visa must be used within 180 days to enter the US. Once entry is made into the US using this Visa, investors and their eligible family members will then receive a conditional green card within 60 days through the mail. This conditional green card is good for two years. Before that 2-year period expires they must file another petition to receive a permanent green card, which will last for 10 years.
At that phase, in order to receive a permanent green card, proof must be shown that their investment money has remained “at risk” during these 2 years, and that they have created at least 10 jobs. As long as conditions are met, the government will issue a permanent green card, which is valid for 10 years.
If an investor wishes they can file for a passport and citizenship after receiving their conditional green card.
Is the burden of proof of job creation on the investor, the regional center, or the project?
Ultimately, the burden of proof is on the investor. If proof of job creation cannot be shown then the investor will be denied a permanent green card. The investor is dependent on the project and regional center to gather the proper information and to provide documentation showing funds were invested and at risk, what they were used for and that jobs were created. The regional center will provide proof that these jobs were in fact created and that USCIS conditions were met.
Learn more about EB-5 Regional Center job creation.
What is the investor’s role in the project?
When investors become part of an EB-5 regional center project, their role is considered to be a passive one. A quarterly or semi-annual report will be provided to them – because every regional center’s projects and terms are different – the delivery of project information will occur according to that projects business plan.
Is there a guarantee that the investor will get their money back?
Under the rules of the EB-5 program, there cannot be an explicit guarantee for a return of funds. All of the funds must be considered “at risk” according to USCIS stipulations for the duration of the investment.
This “at risk” consideration is a reminder to be very careful when selecting a regional center project. Confidence should be held in the management team and developers involved in the selected project.
How does a project qualify for the EB-5 process?
There are two ways. One is where the USCIS receives the project upon the first petition by an investor. At that point they evaluate the project, and make sure it adheres and complies with the requirements of EB-5.
The other way is what is called an exemplar process. In that process, prior to the investors making an investment, the developer sends in all the project paperwork to USCIS for review. That can take generally 6-9 months.
Upon receipt of the paperwork, the USCIS will decide if the submitted project qualifies as an EB-5 project. Once the regional center has exemplar approval from the USCIS, this should give an investor a very high degree of security that there will not be problems regarding the petition moving forward
How detailed is the vetting for the exemplar process through the USCIS?
Quite detailed. The USCIS will thoroughly access financial projections and job creation calculations. The value of “pre-clearance” is that when investors send in their petitions, that these types of petitions will be approved faster since the USCIS has already approved the project.
Is there interest accrued on invested funds?
Interest rates and payments vary by project. Investors must look at the details of each individual projects business plan in order to know the terms of that investment.
How long is the investor’s money tied up in the project?
It varies by project; funds are many times committed for at least 5 years, sometimes longer. Again, every project is structured differently these details can be found in the projects business plan. It is after the investor receives their permanent green card that they are allowed to receive their funds back.