Choosing your path to obtain an EB-5 Green Card: Direct Investment or EB-5 Regional Center Investment

EB-5 capital funding has become an alternative source for raising capital as opposed to traditional sources such as banks. Congress created the EB-5 program in an effort to spur the economy and create jobs through foreign investment. This allowed for foreign investors to invest in the United States and in exchange the investors would receive a green card, eventually becoming citizens. In the wake of the financial crises, American businesses and developers have tapped the EB-5 program to raise capital for their projects.

What is the EB-5 Capital Requirement?

The EB-5 program was designed to allow for a foreign investor to invest in the United States and in exchange for a green card. The EB-5 capital requirement requires that an investor invest a minimum of $500,000 or $1 million dollars, depending on whether the investment is located in a targeted employment area. The investment has to be in a new commercial enterprise and the investment must create 10 full-time jobs for US workers.

The investor may choose to invest the capital in two distinct pathways; direct EB-5 investment or through an EB-5 Regional Center. To determine which pathway to take will depend on several factors that each investor must consider.

EB-5 Capital & Investment Requirements

EB-5 Capital & Investment Requirements

Professional Eb-5 Lawyers

EB-5 Direct Investment or EB-5 Regional Center Investment


What are the Job Creation Requirements for EB-5 Green Card?

The EB-5 program requires that the investment must create 10 full-time jobs for each investor. This requirement is the most important factor that every investor must consider when selecting a pathway.With Direct Investment, the investment must create or preserve only direct jobs created by the investment in that specific commercial enterprise. An easy way to remember this is that Direct Investment equals direct jobs created.

However, if the investor elects to invest through a Regional Center, the jobs created by the investment will be counted along with the indirect jobs created in the surrounding community. An economist is usually utilized to apply a reasonable methodology to account for the jobs that will be created by the investment. These job projections are based on the investment made by the Regional Center and due to the size of the EB-5 projects that a Regional Center is developing, the number of jobs created is much larger than a direct investment. Generally, direct investments are made by an entrepreneur as a sole investor and the majority of the projects are small businesses such as restaurants and retail stores.


What is a EB-5 Direct Investment?

With a Direct Investment, the investor must invest his capital directly into the enterprise. The investor usually has control of the day to day enterprise throughout the investment period and the investor controls the timing of the job creation depending on the needs of the enterprise. The investor has to be an equity investor in the investment through common or preferred shares.


What is a EB-5 Regional Center Investment?

With a Regional Center, the investor must send his EB-5 capital investment to the new commercial enterprise, as designated by the Regional Center. The commercial enterprise will then transfer the funds to the job-creating an entity for control of the EB-5 project. The EB-5 jobs are then created when the pool of investments are combined with other sources of capital. The investor will have minimal control of the EB-5 project and will be designated as a limited partner or an investing member in an LLC.


Defining EB-5 Capital

EB-5 capital is defined as cash, inventory, equipment, secured indebtedness, tangible property or cash equivalence and its valued based on the US Dollar. For most Regional Centers, they require the EB-5 investment to made in cash to meet their requirements. However, with a Direct Investment, it can one or a combination of the of several forms of EB-5 capital. For example, the investor may utilize equipment as a form of capital, so long as the investor can evidence the value of the equipment.


What is required to obtain a Permanent EB-5 Green Card?

In a Direct Investment, the investor is required to submit a tremendous amount of documentation in order to that the job requirement has been met in order to remove the conditions on the temporary green card. These documents include payroll records and tax returns. Additionally, the investor needs to prove that each employee is authorized to work in the United States. With a Regional Center, however, the criteria is different to meet this burden is different. If the project that a Regional Center is making the investment does not attract the required number of investor, the project may not proceed. Furthermore, the job creation in a Regional Center is counted using a different mechanism.

Direct investment is suited for an entrepreneur that wants to have control of the day to day operation of the business. The entrepreneur will need to be well versed in running a business and understanding the culture as well as speaking the language. This pathway will require a lot more work on part of the investor. If the business is successful, the investor will be rewarded financially and of course receive a green card. However, if the business fails, the investor could lose the investment and potentially not receive a green card. An Investment through a Regional Center is better suited for individuals who do have an interest in running a business. It is an ideal investment for someone that is hands off but still want to obtain their an EB-5 green card. Either path will help the investor realize the American Dream.