The EB-5 Regional Center Pilot Program opened new doors for U.S. entrepreneurs with business projects looking to raise low interest debt and equity.
Setting up and becoming USCIS designated EB-5 regional center has many advantages.
Regional centers benefit from attracting large amounts of capital from wealthy foreign investors who do not expect a high return on their money; they are primarily concerned with obtaining a U.S. visa.
What is an EB-5 regional center?
According to USCIS, a regional center is a "business entity that coordinates foreign investment within that area in compliance with the EB-5 statutory, regulatory, and precedent decision framework." Additionally, USCIS states that a regional center must, "Promote economic growth, increase export sales, improve regional productivity, create jobs, and increase domestic capital investment.
And as of April 5th, 2016, there are 824 USCIS approved regional centers.
Why are regional centers attractive to EB-5 investors?
EB-5 investors have two options, they can invest directly into a project or they can invest through an EB-5 regional center. The majority of EB-5 investors opt to invest through a regional center for three reasons. Regional centers take advantage of targeted employment areas, reducing the investment capital requirement from the $1,000,000 that is needed for a direct investment to $500,000.
Another reason regional centers appeal so greatly to many EB-5 investors is that regional centers take away the requirement that EB-5 investors have to manage their investments on a day to day basis. Regional centers handle the daily management.
The third, but arguably the most important reason EB-5 investors choose to invest in regional centers is the indirect job creation. In order to obtain a U.S. greencard through the EB-5 Program, investors must show that 10 full-time jobs for U.S. workers were created through their investment. Regional centers have the advantage over direct investments, in that they're allowed to count indirect and induced jobs as well as direct jobs, making it much more likely that EB-5 investors will fulfill this program requirement and obtain their greencards.
Therefore, it's not only much easier to solicit an investment from a foreigner if you have a regional center, but it's easier to solicit a large number investments from many foreigners at once for a single project.
Check back on Wednesday, when we post "How To Set Up An EB-5 Regional Center".