EB5 Risk Analysis And Suggested Solutions.

Considering EB5 program as a venue to permanent residence? Regional Centers sound like a safety-box to you? If your answers to these questions are both yeses. You need to read along.

First of all,  when you are counting how much you need to spend in order for your new life in US, you should not stop at $500,000. Why? because besides the investment you need to make to the project, you need to buy a new home and pay for college of your children. Of course, there will be living expense too to consider.

Secondly, let’s face it. Nowhere in the law stipulates that Investment with Regional Centers is not insured by US government. EB5 investment, like all other investment you have made, are risk-bond. Therefore, you have homework to do!

Investors have three avenues to green cards. 1) Invest in Regional Centers, obtain temporary green card, permanent green card two years later; 2) Invest in new enterprises of his own, obtain temporary green card, permanent green card two years later; 3) Invest in new office or joint venture in US, obtain L1 visa and then green cards. (We call EB1)

 The following is analysis of pros and risk.

1） Invest to Regional Center.
Advantage: the benefit in investing in Regional Center is that you don’t need to worry about creation of jobs. As we all know, EB5 investors are required to create 10 full time jobs through his investment. To become Regional Center, developer must promise USCIS and they are going to create 10 jobs directly or indirectly. Therefore, USCIS assumes that Regional Center will create 10 jobs when adjudicate investor visa petition.
RiskA, Unknown to a lot of people, Regional centers are all new enterprises. They are approved as Regional centers not because they have created 10 full time jobs or 10 indirect jobs, they rather have persuaded USCIS to give them 2 years for them to achieve the goal. In this sense, it is not that obtaining temporary green card is uncertain. It is obtaining the permanent green card. If the  Regional Center fails to fulfill their promise--create enough jobs, i.e, they have not gathered sufficient funds to start, or even worse, they dissolved, investors will not receive permanent green card.
Suggested solution: a) Investors must realize, USCIS does not guarantee the investment, and they have to make their own judgments about the projects in question. Or simply choose operating projects.

Risk B: There is no exit strategy.
EB5 program is designed for investors. Investors, like stock holders, are at risk! The courts will not support investors’ request to “exit” because the agreement is for investment, not for a loan!
Suggested Solution:
Choose Regional Center that ask for a loan from you, instead of investment.

2） Invest to your own project.
Many thought EB5 programs mean they invest to Regional Center. It is not true. EB5 start with laws that allow investors to create a new enterprises or expand a troubled business. The laws are still in effect.
Advantage: You are in control.
Risk: As other investment of yours, it is at risk.
Suggested Solution: Use your own judgment in selecting the right project.

3) Invest to yourself, creating a new company in US or a joint venture with current US firms. Investors will receive L1 visa and then will be able to obtain green card.
EB5 grant temporary green card and then permanent green card. L1 visa is first step for EB1 green card. EB5 requires at least $500,000 in investment; L1 requires as much as your planned enterprises need. Specifically, investors may create a business plan which stipulate the investment size of a new office. Investors must prove they are able to sustain the operation of the new office. Upon receiving of L1 visa, the investors will operate the project as planned. As long as they do so, without making a profit, the investors will be eligible to obtain EB1 immigration visa which in turn to apply for green card.
Advantage: 1) Investors don’t have to be here. Let’s face it, investors must take care of their businesses to sustain their new life and adventure in US. L1 visa offers them infinite entries in a year.
2） Children enjoy the same benefit as those of green card holders;
3）EB1 green card’s requirements are almost the same as that of L1 visa. Therefore, the investors’ ability to keep the promises to USCIS is the key to further success in green card application.
 4）If you create your own new office, you don’t even need to wire any funds to US. If you want to wire, you are wiring to your own account. Therefore, your investment is absolutely safe.
Risk: L1 visa (Later EB1 green card holder) must manage their own companies. Not everyone has the courage to do so. Therefore, L1 is not for everyone neither.
Solution: Find the right project for you and the right lawyer.