Embarking on the journey to secure an EB-5 visa comes with its challenges and considerations for foreign investors interested in permanent residency in the United States. One of them is choosing the right regional center investment.
Recent news about the USCIS terminating regional centers that failed to meet crucial financial obligations has sparked concerns among potential EB-5 investors.
Although the last thing EB-5 applicants want is to encounter unexpected hurdles or setbacks mid-application, a regional center’s non-compliance is possible.
However, investors can ensure that their potential regional center is financially sound and fully compliant with legal requirements by asking the right questions.
What are the general EB-5 due diligence questions regional centers should answer?
The following fundamental questions can help EB-5 investors clarify how they will safeguard their EB-5 investment journey. Although many are standard practice by EB-5 attorneys, others have become paramount for proper due diligence due to recent events, including an ongoing auditing process and increased scrutiny by the USCIS when approving regional center EB-5 projects through I-956F applications.
1. What is their background and track record?
The regional center must thoroughly document its history, experience, and success rate with EB-5 projects. You and your lawyer can compare this information with that of other EB-5 stakeholders who provide market intelligence about regional centers.
2. How does the regional center comply with EB-5 regulations?
The regional center must provide a clear answer in this case and show a thorough understanding of immigration legislation, transparency in project details, and adherence to mandatory guidelines. For example, EB-5 investors can ask for proof that they paid the administrative fee and other documentation proving they comply with the USCIS policy and immigration law.
Regarding their mandatory fee payment, EB-5 attorneys recommend straight-out asking them for evidence of payment and the USCIS approval of the I-956F project they are offering. In July 2024, the USCIS updated its list of designated regional centers (having removed the recently terminated entities). If a regional center fails to comply with USCIS requirements in the future, it will be removed from this list. EB-5 attorneys recommend checking this list for the minimum due diligence regional centers must undergo.
3. What’s the financial stability of your regional center?
It’s paramount to understand the regional center’s financial structure and how much it depends on lending, other financial mechanisms, and EB-5 capital to develop its projects and run its business. Some of this information may be sensitive or not open to the public, but as a business entity, the RC should provide enough documentation clarifying this financial aspect.
4. What are the costs?
Request information about the fee structure associated with the EB-5 investment, including any administrative fees, management fees, or other costs. This ensures transparency regarding all costs associated with the investment to avoid hidden fees or unexpected expenses.
EB-5 project-specific questions investors should ask regional centers
In a recent webinar by EB-5 Investors.com, immigration attorneys discussed the crucial filters EB-5 investors should apply when selecting a project to back their EB-5 application. The consensus was that EB-5 investors and their legal teams must request as much reviewing of the project’s documentation about the project structure as the financial stability and reputation of the project developer.
Among the questions to ask regional centers to get all the information possible are:
Legal Documentation: offering documents, partnership agreements, and subscription agreements.
Specifics: scope, timeline, funding structure, job creation projections, location (rural or urban), type of project (commercial or residential), and whether it fits any of the EB-5 set-asides (rural, high unemployment area, or infrastructure).
Risk Factors: market conditions, regulatory issues, or project completion risks.
Job Creation: how the regional center calculates and verifies job creation to meet EB-5 requirements.
Economic Impact: the economic impact of the project on the targeted area and how it aligns with the goals of the EB-5 program.
Exit Strategy: what is the exit strategy for the investment, including potential repayment timelines and mechanisms to secure the funds if the regional center fails?
Who does what when choosing the EB-5 regional center?
Conducting due diligence is an essential preliminary step in the EB-5 visa process. While investors are advised to seek professional advice to ensure compliance with the investor visa program requirements and the law, the applicants also play a significant role in this process. They are responsible for keeping track of the documentation the regional center provides, even if their attorneys and other advisors will conduct most of the technical review of the paperwork.
DISCLAIMER: The views expressed in this article are solely the views of the author and do not necessarily represent the views of the publisher, its employees. or its affiliates. The information found on this website is intended to be general information; it is not legal or financial advice. Specific legal or financial advice can only be given by a licensed professional with full knowledge of all the facts and circumstances of your particular situation. You should seek consultation with legal, immigration, and financial experts prior to participating in the EB-5 program Posting a question on this website does not create an attorney-client relationship. All questions you post will be available to the public; do not include confidential information in your question.
