Q & A
- Question: What is the definition of “shovel ready” for EB-5 premium processing? Answer: A “shovel-ready” project is a project that includes a project that includes a business plan that represents a business project that is sufficiently developed to support the immediate filing of actual I-526 petitions from participating investors. The plan should be supported by economic analysis, the actual capital-investment structures and documentation for the investment offering, along with the anticipated regional economic impacts, and the Regional Center’s operating plan and structure.
- Question: Must an EB-5 foreign investor, whether by direct investment or by regional center, live in the immediate area where his investment is being made? Answer: Whether via the “direct” program or through a Regional Center project, there is absolutely no requirement for the investor of said project to live in any set geographic area in relation to the project. This however, does not affect the requirement to be in the US, based on certain regulations, and the management requirement imposed by Federal Regulations. Either way, RC or Direct, you can live invest in a project in Alaska, and live in Florida, and through “certain” investment structures, your “management” requirement can be substantially reduced.
- Question: When a Regional Center (RC) uses an escrow account for investors’ investments, can the money be held in escrow until the investor’s conditional immigrant visa is issued or only until the I-526 is approved? Answer: Although USCIS does not require the use of escrow agreements, it is common practice to use escrow agreements for investor funds. Escrow agreements are permissible by USCIS if the terms of the escrow agreement are in accord with 8 CFR 204.6(j)(2), which requires that the I-526 petition be accompanied by evidence that the required amount of capital has been placed at risk, which is the actual commitment of the required capital into the project. Escrow agreements may allow for withholding investor funds in escrow until the investor’s EB-5 visa is issued, if the agreement is otherwise EB- 5 compliant.
- Question: May a Regional Center continue to build upon initial projects with new projects, i.e. introduce new enterprises in addition to what was originally planned before RC designation? Answer: A Regional Center Application as submitted to USCIS will include certain county or census tract designation (up to an entire state, and over state lines, if counties are contiguous), along with specific industry NAICS codes designations, which the RC is initially designated for and approved by USCIS. This is all included in a Regional Center Econometric Study, spelling out for USCIS the proposed economic impact area (geographical & Industry). At anytime, after initial designation, a RC may incorporate additional projects, as long as they are within the geographic and industry designation. If they are outside the scope of the initial designation in either way, an amendment must be submitted with the new projects industry and/or geographic area.
- Question: Even though the statute requires an EB-5 petitioner to have invested or be in the process of investing the required capital, does USCIS effectively requires the entire capital amount to be already invested and at risk in the commercial enterprise at the time the I-526 petition is filed? Answer: USCIS regulations requires that the I-526 petition is accompanied by evidence that the required amount of capital has been placed at risk, and notes the following:”Evidence of a mere intent to invest, or prospective investment arrangements entailing no present commitment, will not suffice to show that the petitioner is actively in the process of investing. The alien must show actual commitment of the required amount of capital.” The capital does not have to be fully invested at the time of the filing of the I-526 petition. However, the evidence provided in support of the investor’s I-829 petition must show that the investor has invested or was actively in the process of investing the capital, and that the investment was sustained throughout the period of conditional permanent residence.
- Question: How am I supposed to “invest” funds in a regional center if I am not in the US, and have no US bank accounts? Answer: There is neither a requirement for you to have a US Bank account, nor be present in the US, in order to invest in a qualifying EB5 project. Furthermore, your investment is not made in a Regional Center. A Regional Center is considered “any economic entity, public or private, which is involved with the promotion of economic growth, improved regional productivity, job creation and increased domestic capital investment.” Your investment is being made into the new commercial enterprise itself, via an escrow agreement, to be utilized directly by the business, as laid out in a PPM and subscription agreement. More important is the burden of proof on the investor to provide documentation and tax returns to prove that funds were obtained in a legal and lawful manner. Also, transfers into the escrow account must show the source of funds to the investor.
- Question: If I invest through a Regional Center, does that mean I only have to invest $500,000? Answer: Usually yes, but sometimes no. The majority of Regional Center affiliated projects are located within a Targeted Employment Area (TEA), which effectively reduces the required capital investment amount to $500,000 (only), meaning the “actual” investment into the new commercial enterprise itself is only $500,000. The administrative fee that Regional Centers charge is not an “investment,” per se. It is a fee charged by Regional Centers for their operational and administrative costs, and it is not considered part of your capital investment. The Regional Center designation removes the burden of “direct-jobs” only being counted toward the 10 job requirement. It allows for indirect and induced jobs as well. Invest in a Regional Center project that is located in a TEA, and yes, you will only have to invest $500k. Doesn’t mean the regional center won’t require you to pay a $50k administrative or subscription fee.
- Question: I want to do due diligence on the Regional Centers before making a decision to invest. This would include visits to the facilities and the management staff in the United States. How do I get a visa to enter the USA for these inspections? I live in Vietnam. Answer: When I was in Vietnam, this past November ’11, in both Hanoi and Ho Chi Minh, I accompanied some of our prospective investors to the (state department side of the) Embassy in Hanoi, after they were denied non-immigrant visas to visit an EB5 Project. I spoke to the Head of the State Department side of the Hanoi Embassy, and he explained certain “red flags” they look for when issuing non-immigrant (tourist, or business) visas to visit the U.S. It is not impossible to obtain a Visa to visit the U.S. for the purpose of Due Diligence of an RC or EB-5 Project… However, you must clearly document your financial and property ties to Vietnam, along with your previous international travel.