How secure is an EB-5 investment?

EB-5 capital must be "at risk." However, the law does not specify what degree of risk it must be, only that the entire amount of capital needs to be at risk to some degree. The safety of the capital largely depends on the success of the project and the arrangement of the loan structure. In a typical regional center EB-5 setting, when the loan matures, the developer (Job Creating Entity) will repay the loan amount to the New Commercial Enterprise (NCE) and the NCE then distributes the EB-5 capital back to each investor. In most cases, the developer will make repayment of the loan through either cash flow, refinance, or sale of the business. You should look into the exit strategy of the project and review how the repayment is done after the loan matures, as well as examine the PPM documents to determine whether there is a collateral for repayment of the loan.

You must do thorough due diligence to search for a good regional center project. There are good projects in the United States with an excellent track record. Your investment must be at risk to qualify for an EB-5 visa. You should start by hiring an experienced EB-5 attorney.

You have to carefully undertake your due diligence before investing. If you choose well, then your objective will likely be met. This is no different from any other type of investment; there is risk that is reduced by undertaking extreme due diligence.

All investments are required to be "at risk," but you can (and should!) retain the services of immigration counsel to review the immigration possibilities, and an investment adviser to review the business viability.

There are several successful regional centers that have had a track record of getting both I-526 and I-829 approvals as well as the return of the entire principal investment amounts. Of course, if the project is purely equity-based, then you are agreeing to have your investment invested in return for having a higher rate of return based on your equity until the project closes or is sold to get your money back. When the project fails or is sold for less than your full investment amount, you will only get what is left, which is why EB-5 investment, like all other investment is at risk. No investment is completely secure and no EB-5 investment can be guaranteed. However, if you do careful due diligence, there are several regional center projects that have a clear exit strategy that could minimize the risk of losing your investment. The key documents you must read and understand are the subscription agreement, limited partnership agreement, the loan document if the project is loan based, and the comprehensive business plan.

The security of an EB-5 investment is no different from any other investment. It depends upon the project, and the risk varies widely from project to project. In order to be considered "at risk," the EB-5 capital must be subject to both gain and loss. The EB-5 law, however, does not define the level of risk, nor does it require that the EB-5 capital be subject to unreasonably high risk. You can even takes steps to reduce, but not entirely eliminate, some types of risk in your EB-5 investment. It cannot be guaranteed and it cannot be a loan; it must be a real investment. That makes the due diligence you conduct BEFORE you decide to invest all the more important. Also, you should read the offering materials and agreements with the regional center very carefully, or better yet, hire an expert to read it and advise you before you sign anything.

Your agreements for return on investment are a matter of contract law. You should engage your own legal counsel to review and advise you prior to your signing.

Just like an investment outside of the EB-5 context, it really depends on the specific investment. You need to do appropriate due diligence before making any investment, EB-5 or otherwise. The EB-5 rules require the investment to be "at-risk," so any investment that contains any kind of guaranteed repayment (other than on I-526 or immigrant visa denial) is not going to qualify under the EB-5 program.

An EB-5 investment is similar to any other type of investment. All funds are at risk and you could lose your money. If you purchased stock in the stock market, the company could go bankrupt and so could a regional center. The regional center documents show what the exit strategy is and you should read them carefully. If all goes well, your money will usually be returned to you in around five years. The EB-5 program does not permit a regional center to guarantee any type of investment.