Pros And Cons of EB-5 Direct Investment

A foreign individual can invest in the Immigrant Investor Program, also known as the EB-5 visa program, in one of two ways. They can make an EB-5 direct investment or they can invest in a USCIS approved regional center. This article discusses the pros and cons of the direct investment option.

For information on the regional center program and its benefits, click here.

EB-5 direct investments pros and cons include:

Pros of the EB-5 direct investment

•The direct investment is a fantastic option for investors who wish to open their own business or expand an existing business.

•An investor has a lot more control over their business operations if they go this route rather than the indirect regional center route.

•An investor is not limited to investing in targeted employment areas. (TEAs: areas that are rural or have a high unemployment rate.) Instead, an investor may see better economic opportunities in big cities.

•If an investor fulfills all the requirements they will receive green cards for themselves and their spouse and unmarried children under the age of 21. However, this isn't as primary a goal for direct investors as it is for investors in the regional center program. Regional center investors are less business driven than direct investors.

Cons of the EB-5 direct investment

•The investor is dealing with the business directly. There is no intermediary and therefore slightly more risk involved. It's also time consuming and may or may not be stressful for the investor.

•The capital required to invest in an enterprise is $1,000,000, unless an investor invests in a targeted employment area (TEA). If they invest in a TEA, then the capital requirement is lowered to $500,000.

•The EB-5 direct investor has to prove that he or she established a new commercial enterprise and that could potentially take a lot of time to find the evidence required by USCIS. 

•An EB-5 applicant investing in the direct program must also be actively engaged in management roles within the enterprise investment.

•As part of the EB-5 Program process, an applicant investing their money directly into an enterprise has the tough task of proving that they will create 10 full time jobs for qualified workers within two years of their visa approval process. If they cannot, they're visa will be denied. (Direct jobs are actual, W-2 employee jobs that are located inside the enterprise investment.)

Overall, it's for each individual foreign investor to decide whether the direct investment option or the regional center program is best for them and their specific circumstances. Speak to a knowledgeable immigration attorney for advice.

 

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