What are EB-5 Regional Centers?
Why do the majority of EB-5 investors choose the Regional Center Program route?
EB-5 Regional Centers are public or private organizations designated by United States Citizenship and Immigration Services (USCIS) that can sponsor capital investment projects located in a specific geographical area. The majority of EB-5 investors choose Regional Center Program projects for three main reasons:
1. Regional Centers can take advantage of indirect and induced job creation.One of the main requirements of the EB-5 Program is that investor's investment must create or preserve a minimum of 10 full-time jobs. The regular EB-5 Program only allows direct jobs to be counted, whereas, the EB-5 Regional Center Program benefits from being able to count direct, indirect and induced job creation towards their investor's investment requirements.What is the difference between direct, indirect and induced jobs and why is it important? Direct jobs are identifiable positions that are created in the business that the investor placed their capital into. Indirect jobs are positions associated with the project and were created as a result of an EB-5 investor's capital investment. An example of an indirect job created would be a vendor who supplies a product or service to the EB-5 project business. The third type of job creation is induced job creation. A large development project in a rural part of a town would have a large economic impact on the surrounding area. Construction workers and employees may spend money at surrounding businesses. Jobs created in the community and the increased spending near where the EB-5 project is located may be counted as induced job creation. Indirect and induced job creation tend to be easier to count. Regional Center projects also typically, give investor's a job creation buffer to work with to ensure that their job creation requirements will be fulfilled.2. Regional Center projects are often located in targeted employment areas.EB-5 Regional Center projects often take utilize and invest in targeted employment areas (TEAs). These are areas that are either rural or have a high unemployment rate. There are two main benefits to investing in a TEA. The first benefit is the lower minimum investment amount threshold. EB-5 investors who invest in projects not located in a TEA must make the minimum investment of $1 million, but investors placing capital into projects located in TEAs, can make a lower minimum investment of $500,000. The second benefit of is investing in a TEA and obtaining that lower investment amount is that EB-5 investors can still invest in major cities. There is no predetermined list of designated TEAs. Each state may have their own requirements. Consult an attorney to learn more. Depending on the state, an investor may be able to gather their own data and propose a TEA location. TEA projects have been located in areas such as New York City and Los Angeles.3. Regional Center Program investors can take a policy-adviser role.The normal EB-5 Program requires investors to take a more active day-to-day managerial role in their project, while Regional Centers allow for investors to take on the role of policy advisers. As a result, EB-5 Regional Center investors do not have to live near their investment. They can live and work in any state and not be tied down to managing their EB-5 investment. This is great if investors want to live in a certain region for the school districts or the city-life.
For more information about getting started investing in the EB-5 Regional Center Program, send us a message.
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