Your Future in America: Understanding EB-5 Opportunities

Suresh Rajan, CEO, LCR Capital PartnersAs the son of Indian immigrants, I have witnessed first hand both the struggles and opportunities associated with seeking a future in the United States. It is with this knowledge that I founded a firm centered around a successful US immigration program.

In 1990, the United States government created the EB-5 Immigrant Investor Visa Program in an effort to attract foreign investment and boost economic growth. The program rewards foreign nationals who invest $500,000 (in a targeted employment area) or $1 million in a U.S. business with U.S. Green Cards for themselves and their immediate families (children under the age of 21). Green cards are granted upon the creation of at least 10 full-time American jobs.

EB-5 Investment Options and Opportunities
There are two ways to invest in the EB-5 program: either through direct investment or through indirect investment via a Regional Center (RC), such as LCR. There are a number of key differences between a Regional Center and a Direct EB-5 project including cost, time, flexibility, job creation and rates of adoption.

Direct Investment:
Due to the nature of the direct program, where the investor is responsible for the entire business plan and investment documentation process, the timeline before making the investment is typically longer with the direct EB-5 program. In the direct investment case, the investor is responsible for managing the business and fulfilling the minimum job creation requirement. This is not a simple task, as the investor must start and fully manage a business in the US, which requires ample work experience and know-how.

Additionally, since the investor is responsible for managing the business,he or she must physically work at the designated site location. This can eliminate the flexibility to pursue educational and career opportunities in other preferred locations. Regarding job creation, the direct program only accepts direct W-2 jobs towards the 10 job requirement, where as the Regional Center program allows for indirect and induced job creation. The direct program only attracts
five percent of all EB-5 applicants, while the Regional Center program attracts the other 95 percent.

While the Regional Center program is preferred by individuals looking to invest in an EB-5 project, investors must be very selective when it comes to the project that they choose to invest in

Indirect/Regional Center Program:
Regional Centers are designated by the United States Citizenship and Immigration Services (USCIS) to sponsor and manage capital investment projects via the EB-5 program. Regional Center management normally comprises of a number of individuals with diverse work experience and expertise. Thus, making them well-equipped to drive the business as required by the program. While the direct program requires the investor to actively operate and live near the project, the Regional Center program allows the investor and his/her family to move anywhere in the U.S. The Regional Center manages the EB-5 investment and coordinates the legal requirements and reporting that are required by USCIS for an individual’s application. Additionally, since indirect job creation can be counted toward program requirements, a more diversified set of investments is available to an investor for consideration.

While the Regional Center program is preferred by individuals looking to invest in an EB-5 project, investors must be very selective when it comes to the project that they choose to invest in. When selecting an EB-5 project, there are certain criteria that an investor must keep in mind, including:

• What precautions has the Regional Center taken to maximize investor protection?
• How will the investor be able to keep track of their funds?
• Does the investment offering use a Broker-Dealer in the transaction?
These are just some of the many things an investor must take into consideration when evaluating an investment into the growing EB-5 industry.

The EB-5 Program: Looking Forward
The EB-5 program is set to expire at the end of September, and while I have high confidence that it will be renewed and extended, I have equal confidence that it will be changed in meaningful ways for the investor, both beneficially and otherwise. The single biggest issue from an investor’s standpoint may be the likely significant increase in minimum investment amounts. While those amounts are not determined just yet, they are likely to be north of $800,000. For that reason alone, we certainly encourage our current and potential investors investors to move with haste in their evaluation process.

We have been actively involved in current efforts to reform the EB-5 program. We have provided testimony to the U.S. Congress this past March and have weighed in with regulators on appropriate reforms. Having started in Washington, DC as a young staffer on Capitol Hill when the program became law in 1990, and now working in that city quite a bit on EB-5 reform and renewal, it is as if I have come full circle on my professional career.

As an immigrant myself, and somebody who has enjoyed the benefits of both American residency and citizenship, I understand both the value that a green card offers, and the challenges that exist in securing it. I genuinely believe that for individuals seeking to secure a green card, EB-5 is probably the best way to meet those aspirations.