Should you rent an EB-5 regional center? What are the benefits and what are the issues should you know about before committing?
When traditional methods of raising capital are unavailable, developers, entrepreneurs and businesses are increasingly turning to the EB-5 Program and particularly the Regional Center Program to raise capital for projects. Foreign investors, mostly from mainland China, are investing $500,000 in EB-5 regional center projects in return for green cards.
Utilizing a regional center is a great way to raise capital for projects.
Why rent an EB-5 regional center instead of starting your own regional center?
There are two major reasons why developers, entrepreneurs and businesses choose to rent a regional center rather than starting a new one.
- There are many fees involved with setting up and getting a regional center approved.
- It typically takes about two years for USCIS approval.
Fortunately, project developers don't have to start their own regional center, instead they can rent one. There are, however, a few things developers, entrepreneurs and businesses should look into before to choosing and renting a regional center.
- Is the regional center USCIS approved and designated? Request the letter of approval (It will help you with the following questions as well.) Are they compliant with the laws? Are they intimately familiar with the EB-5 Program?
- What is the geographical scope of the regional center? Each regional center has a geographical limitation. Can you develop your project within these borders?
- Each regional center is approved for certain industries. Check the regional center NAICS codes to determine if that regional center can take on a project in your industry. If they cannot, this can be amended, but it takes time.
- Are there any legal actions taken against the regional center you've been looking at?
- Overall due diligence. When selecting a regional center you must conduct basic due diligence. This includes reviewing the regional center's team background, their previous projects (successes and failures), and their current project offerings. What is their I-526 petition approval percentage? Reduce your risk by finding a regional center with past performance success. Although past success does not guarantee future success, it is important to look for.
- Have you and the regional center created and negotiated a structured contract that you're comfortable with? Are the costs and terms agreeable? Will you have oversight to ensure the regional center's compliance?
While these questions require a lot of due diligence, renting a regional center is a quicker and easier way to raise capital than starting a regional center from scratch.