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EB-5 Green Card – Choosing Between Regional Center Program and Direct Investment

A woman choosing between two options

In March 2022, Congress passed legislation that re-authorized the EB-5 Regional Center program and set new investment minimums to qualify for the EB-5 green card, among other changes. Current minimums are $800,000 for projects in Targeted Employment Areas (TEA) and rural areas, and $1,050,000 for all other projects.

Another important change is that applicants’ I-526 petition and adjustment of status application can be filed concurrently, which makes it a lot more convenient for applicants in the United States who can qualify for employment authorization during the several years while the EB-5 application is pending.

Now that investment through Regional Centers are again an option, what factors should a prospective investor consider when choosing to either invest through a Regional Center or through the Direct Investment option?

EB-5 through Regional Centers – Strategic Considerations

Regional Centers are USCIS-approved organizations in each state that pool funds from investors and take care of the logistics of building and operating a business project, aiming to create 10+ jobs per investor as required by the EB-5 regulations. Regional Center projects get a leg-up in meeting this job-creation threshold because applicants can include indirect jobs generated by increased economic activity, in addition to direct employees hired by the business. Regional Centers usually organize projects in targeted employment areas (TEA) so that each investor can qualify under the lower $800,000 threshold.

As of October 2021, there were 632 approved regional centers across the United States, which are listed in the USCIS website, linked here. USCIS does not guarantee the performance of each regional center, so it is very important that the investor undertakes due diligence and analyzes all details of each project before deciding to invest in it.

Regional centers are a preferred choice for investors who seek a passive investment, and don’t mind paying administrative fees and facing low or even negative returns on investment. The regional center will take care of the management of the business project and the creation of jobs. Note, however, that job creation, return on investment, and approval of the immigrant petition are not guaranteed even if an applicant invests through USCIS approved regional centers. The commercial success of a project through a regional center is widely divergent by regional center, so sufficient research and careful selection of the regional center is key.

EB-5 through Direct Investment – Strategic Considerations

The direct investment option is for entrepreneurs operating their own business in the United States. Entrepreneurs qualify for the EB-5 green card through investing in and operating their own business project and creating the required 10+ U.S. jobs through their investment.  An important distinction is that the 10+ jobs created must all be “direct” jobs, which means direct employees of the investment enterprise.

Unlike the Regional Center program, which usually takes the form of a $800,000 lump-sum investment made to the Regional Center, investments for the Direct Investment stream can be spread out over time, as long as the total investment exceeds the $800,000 or $1,050,000 threshold.

The Direct Investment pathway is preferred by investors who are comfortable with creating, operating, and controlling their own businesses and meeting the requirement to hire 10+ new employees.  Investors typically have more opportunity for profit on investment compared to a regional center program, because the investor has more direct control and knowledge over the business’s operations.

Recommendations

Researching both the economic aspects and the legal aspects of an EB-5 investment project is very important. Once the appropriate investment vehicle is selected, we recommend working with an experienced attorney to meticulously analyze the source of funds invested and preparing the right documentation to minimize risks of denial of your green card application.

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This website and blog constitutes attorney advertising. Do not consider anything in this website or blog legal advice and nothing in this website constitutes an attorney-client relationship being formed. Set up a one-hour consultation with us before acting on anything you read here. Past results are no guarantee of future results and prior results do not imply or predict future results. Each case is different and must be judged on its own merits.

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