What is & Regional Center?
The EB-5 Visa Program has become a popular option for foreign nationals seeking permanent residency in the United States. Established in 1990, this program offers a pathway for qualified individuals to invest in the U.S. economy and obtain a Green Card. One of the ways investors can participate in the program is through an EB-5 Regional Center.
Investing in an EB-5 Regional Center provides investors with a convenient investment option and a higher likelihood of achieving U.S. residency. Unlike direct EB-5 investments, which require investors to establish and manage their own business operations, investments through a Regional Center allow investors to pool their capital with others and rely on the Regional Center’s management team to create jobs and stimulate economic growth.
Investing in an EB-5 Regional Center also offers investors a greater degree of certainty and predictability in the immigration process, enhancing their chances of obtaining a U.S. Green Card.
In this article, we will provide a comprehensive overview of EB-5 Regional Centers, including everything you need to know to invest in the EB-5 visa program, such as the benefits of investing through a Regional Center.
By the end of this article, you will have a clear understanding of what an EB-5 Regional Center is, how it operates, and the key factors to consider when evaluating investment opportunities.
Whether you are an EB-5 investor or a real estate developer interested in EB-5 funding, this article will offer valuable insights into the most convenient and popular EB-5 investment path available today.
What is an EB-5 Regional Center?
An EB-5 Regional Center is an organization established according to the guidelines of the EB-5 Immigrant Investor Program, a U.S. government initiative designed to encourage new investments in job-creating projects. To qualify as a designated regional center, the organization must submit Form I-956 to U.S. Citizenship and Immigration Services (USCIS) to obtain authorization.
Foreign investors can qualify to participate in the EB-5 program by making an eligible investment in EB-5 projects sponsored by designated regional centers, provided that these regional center projects create at least 10 new jobs in the U.S. for each investor.
As we will discuss in further detail below, the main benefit and reason most EB-5 investments are made in projects sponsored by regional centers is due to the increased flexibility in meeting job creation requirements. EB-5 projects sponsored by designated regional centers can count all indirect, direct, and induced jobs, whereas EB-5 projects not
sponsored by regional centers can only count direct jobs, with the requirement of creating 10 jobs per investor.
When an investor chooses to invest through a designated regional center, they will transfer their funds into the regional center’s investment fund. The regional center’s investment fund then lends EB-5 capital to a real estate project or uses EB-5 capital to purchase equity in that project. This structure allows the regional center to oversee the flow of EB-5 funds, providing a higher level of transparency. The regional center is also responsible for reporting to USCIS on the project’s progress and the number of jobs created.
One of the challenges faced by the EB-5 program is the potential for fraud and misuse of investment funds. To address this issue, the EB-5 Reform and Integrity Act of 2022 (RIA) was enacted.
The Act aims to increase transparency and accountability among designated regional centers by requiring them to provide audited financial statements and regular reports to investors regarding the status of their investments. Additionally, USCIS now requires detailed background information on all individuals associated with the regional center, making it easier to eliminate bad actors.
These changes are designed to protect investors’ funds and ensure successful outcomes in the immigration process.
Differences Between Regional Center Investments and Direct Investments
EB-5 investors have the option to either invest directly in a commercial enterprise or invest through a Regional Center.
The minimum investment amount is the same for both models, but there are differences in the total number of jobs created, the role of the Regional Center, and the investment structure.
Direct investments only count the jobs created by the new commercial enterprise where the EB-5 investment is made, whereas investments through a Regional Center can count both direct and indirect jobs, making it easier to meet the job creation requirements. Indirect jobs result from the project’s spending on goods and services in the area, while induced jobs are those created by workers spending their wages. Investors making indirect investments must invest in a commercial enterprise sponsored by a Regional Center authorized by USCIS
Investments made through Regional Centers often involve the establishment of multiple entities, including a job-creating entity separate from the new commercial enterprise (NCE). Direct investors must invest directly into the NCE and can only count the jobs created by that NCE. Therefore, loan structures are unsuitable for direct EB-5 investments because the loan involves at least two entities—the lender and the borrower (the job-creating company).
While counting direct jobs might seem straightforward, some jobs will be excluded from the total calculation, including positions held by contractors, employees of subsidiaries/affiliates, investors, and their immediate family members. Direct jobs must be filled by U.S. workers, and multiple workers can hold a full-time role if there is a formal agreement regarding job sharing