EB-5 investor green card applicants often ask me whether they should make an investment in a Regional Center or in a business they create. Both have advantages depending on the individual. Here are some general factors to consider:
• 70% to 90% of EB-5 investor choose Regional Centers but they are not for everyone.
• Regional Centers may count indirect employment toward the 10 jobs each investor must create. One’s own business must create the jobs as direct hires.
• The investment amount is $1 million unless the enterprise is in a high unemployment or rural area. High unemployment is defined as 150% above the national average. Most Regional Centers are located in a high unemployment or rural areas and thus the amount of investment is $500,000 not $1 million; to create a new company with $500,000 it must be in a rural or high unemployment area and with today’s high national unemployment rate this can be a challenge.
• Regional Centers are run by developers and one does not have to operate the enterprise. One may go to school, enjoy retirement, or own another business. The same is true for a self-owned business; it may be run by another manager, although the investor may choose to manage its day-to-day operations. Some prefer to manage their own company and investment, and are not interested in relinquishing control to another.
• Returns on Regional Center investments are usually low. Creating one’s own business may generate a much higher return.
• As soon as the case can be documented and the investment made in a Regional Center, the first step of the EB-5 process (Form I-526) can be filed. Usually the same is true if one purchases a business. However, for one creating a new firm from the beginning, the funds must be substantially spent and not just sitting in the company’s bank account – for the funds to be “at risk,” and the I-526 filed. Thus, investing in a Regional Center can be a faster visa process than creating a new business.
• Often there is no temporary visa until the owner/investor immigrates allowing an investor to run a new enterprise. This can complicate the process of opening a new business unless one has a trusted manager to run the new enterprise until the EB-5 green card is issued.
• The USCIS has approved hundreds of EB-5 cases for two of the Regional Centers and more than 70 for two others. Other Regional centers have had some petitions approved indicating the USCIS accepts the Regional Center’s business concept. People creating a new business must provide the USCIS substantial documentation about the enterprise to prove it is a viable business, the funds are at risk, and the jobs will be created.
• Individuals may be more comfortable in investing with relatives or business acquaintances or in a business they form than with a Regional Center developer they do not know.
These are just some of the factors to consider. I am pleased to talk with investors about the process and advantages of both Regional Centers and individually created businesses. I help people file both types of EB-5 cases.
Martin J. Lawler
2 comments:
I had not heard that 70-90% of these applicants pursued Regional Center investments. That is a pretty broad range.. Do you have specific numbers?
There are now well over 100 of these Regional Centers. There is even an option to invest in the American territory of Guam. So, I think the vast amount of options may be partially responsible for all of the interest in Regional Center investments.
Post a Comment