EB-5 lessons developers wish they know before diving into the EB-5 Program.
The EB-5 Program offers a very attractive way of raising capital for big development projects. In exchange for U.S. visas, wealthy foreigners invest a minimum of $500,000 into at-risk U.S. based projects that create jobs for U.S. workers. Many developers utilize this program to obtain low-interest capital for their projects before conducting due diligence and learning the complexities involved. Here are a few EB-5 lessons developers learned the hard way.
3 EB-5 lessons developers all too commonly make:
- Not conducting thorough regional center due diligence.
Most developers want to work with a regional center to find EB-5 investors for their projects. There are thousands of regional centers to choose from. Many regional centers will claim they have much more experience and success than they actually do. There is no policing and no government oversight keeping these regional centers honest. It is up to the developer to conduct due diligence into any regional center claim.
Developers will want to verify any prior projects the regional claims they've worked on. They'll want to interview all the regional centers main team members (owners, advisers, attorneys, and other experts) to ensure expertise and professionalism. They'll want to thoroughly review all documents provided and make sure they're tailor made for your project and not just a standard template you can find online.
- Not spending the time to find experts that understand the EB-5 Program.
The EB-5 Program is complex and nuanced. It's important to spend time finding experts that understand how the EB-5 Program operates. You could lose a lot of the advantages the EB-5 Program has to offer by, for example, using an economist that does not use the best methods for calculating job creation. A lower job creation forecast then means that you cannot raise as much capital because you cannot use as many EB-5 investors.
- Not keeping your investors updated.
When you begin working with EB-5 investors, it's important to remember that they are the most crucial members of your team. They are the reason you're going through all the work involved in utilizing the EB-5 Program. Most investors live half-way around the world and often don't speak English, so it's important to remember that keeping them updated on all aspects of the project from important deadlines to delays will help instill confidence in your investors.
To learn more about the EB-5 Program, consult with an experienced EB-5 immigration attorney.