Can You Make A Safe EB-5 Investment?

  KAPIN PLLC New York EB-5 Immigration Attorney

Does a safe EB-5 investment exist?

Potential EB-5 investors have many options when it comes to investments, but are any of them safe investments?

Can an EB-5 investor obtain a guaranteed return?

One of the primary requirements of the EB-5 Program is that an applicant's investment must be "at-risk." What does the "at-risk" mean and can an applicant still make a "safe" EB-5 investment?

The EB-5 Program attracts entrepreneurs from all over the globe because of its benefits. A $500,000 investment into a qualifying U.S. commercial enterprise allows EB-5 investors and their immediate family to obtain permanent U.S. residency and then ultimately U.S. citizenship.

The ideal situation for many EB-5 applicants is to make an EB-5 investment that fulfills the EB-5 Program requirements and that gives them a return on their investment. More often than not, EB-5 investors are content with simply receiving their initial investment back if they have obtained their green cards.

The program's requirement that the capital be "at-risk" means that the EB-5 investor cannot receive a guaranteed return on their investment. Do not trust anyone who offers a "risk-free," or "safe investment," in regards to the EB-5 Program.

While an investment must be "at-risk" and cannot have any guarantees, there are ways an EB-5 applicant can minimize the risk:

  • Select several EB-5 projects that interest you and conduct thorough due diligence of not just the project and the project sponsor, but also the regional center.
  • Take the time to fully understand and become comfortable with the business model, the history, the exit strategy, the financial analysis, the job creation methodology, and the track record.
  • Are you comfortable with the location and nature of the business? Is the business located in a TEA?
  • Ask the regional center for references from past investors.
  • Learn about the regional center's success rate. Keep in mind, however, that past performance does not guarantee future success.
  • Consult with a knowledgeable EB-5 immigration attorney and have them review all the necessary documents and provide advice on the projects.
Proper due diligence can mitigate some risk, but it cannot eliminate all the risk. Consult with an attorney to discuss your particular case.

 

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