How Developers Raise EB-5 Funding
Since being established in 1990, the EB-5 Program has raised billions of dollars from foreign EB-5 funding to boost the United States' economy and create tens of thousands of jobs.
The EB-5 program is a popular low-cost source of EB-5 capital for a variety of projects, but many developers make the mistake of going after this source of funding without understanding the variety of challenges involved.
It can be a huge waste of time, money, and resources to attempt to go after EB-5 capital without researching the EB-5 requirements for foreign investors. It is imperative that you understanding the EB-5 investor's goals and motivations.
EB-5 investors' primary motivation is to be able to live and work in the United States.
If a foreign national invests $1,000,000, or in some cases $500,000, in a qualify business in the United States they may qualify for a green card. In order to gain this permanent residency, they must meet the job creation requirement within two years of their initial investment.
Each EB-5 project must create 10 jobs per investor within two years.
With such a strict deadline, an EB-5 investor will be very concerned with finding projects headed by developers and management teams who have proven-track records for success and for being on time. An EB-5 investor will be much more interested in developers who have spent the last two decades successfully creating twenty of the exact same business, rather than a new developer with lofty and risky projects expectations.
EB-5 investors look for projects that have well thought out business plans.
They look at the location of the proposed project and at the surrounding market. They want to see that the project presents a strong market demand for decades to come. And most importantly they want to make certain that the projects will fulfill the job requirements.
Additionally, EB-5 investors know that with risky investments, there's always the chance that something unexpected could happen to hinder the project's advancement, and that is why having an experienced developer is critical to them.
They want someone with decades of experience who can steer projects through unexpected problems and keep them on time so that EB-5 investors can meet all of their program and petition deadlines.
Developers working with the Regional Center Program offer investors a more flexible way to fulfill their biggest requirement-job creation.
Through the normal EB-5 program, new commercial enterprises must meet the requirement of creating 10 direct jobs. Showing that a project created 10 direct jobs can be a difficult task. An alternative is the Regional Center Program, which instead allows EB-5 investors a more flexible option. Their projects can create direct, indirect or induced jobs.
The EB-5 Program appeals to a lot of Chinese foreign nationals because an EB-5 investor only needs on visa for his or her family.
Under this visa, the family can then live, work, and go to school anywhere in the United States.
EB-5 investors are also concerned with making their initial investment back within about five years along with some interest on the investment.
However, as with every EB-5 investment, one of the requirements of the program, is that there can be no guaranteed return on the investment. The EB-5 capital must be placed "at risk" to qualify. And it is for that reason that many EB-5 investors take the time to research and find the "safest" investment they can make. They'll hire experts to look at economic models and they'll look for developers who have a history of successful projects that create the requisite number of jobs they need.