EB-5: Understanding Regional Centers

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As an EB-5 immigrant investor, investing through a regional center can provide you with tremendous benefits compared to investing independently. USCIS requirements are eased significantly for you, and your capital can be pooled together with that of other EB-5 investors to invest in a single project. The regional center, a public or private entity, will obtain a license from the USCIS, and will act as either a general partner under an equity model, or a financier under a loan model.

Investing as an EB-5 investor through a regional center is requires highly interdisciplinary expertise in the areas of business law, real estate, and immigration law. The attorneys at The Law Firm of Shihab & Associates, Co., LPA have decades of combined experience in successfully navigating through such complex areas. Contact us by email or phone at 1-877-479-4USA (4872) for a consultation to discuss your planned investment and how we can represent your interests effectively.

Working Together with a Regional Center

The role of a regional center in your EB-5 investment path will be either to develop their own projects for you to invest in through an “equity” model, or to pool the resources of EB-5 investors like yourself, and to lend money to the projects of others through a “loan” model.

Regional centers apply for and obtain a license from the USCIS, and make it easier for EB-5 investors to invest in a new commercial enterprise. Regional centers are often run by real estate developers, financiers, immigration experts, or other investors. Their goal is to attract E-B5 investors and invest in new projects. They must find and select EB-5 investors, and select and vet new projects to invest in. Often, a regional center will operate in a “Targeted Employment Area” (TEA) which will allow you to gain an EB-5 visa with only a $500,000 minimum investment.

You will likely work with other players as an investor in a regional center, including a project principal. These players need to fund their projects—often real estate and construction enterprises—and they desire access to foreign capital when domestic capital is unavailable or unfavorable. The project principal will often develop a comprehensive written project and business plan.

Economists may be involved with the regional center, to use models to project job creation, and to obtain accurate, detailed information from the other players. There may also be a corporate or securities counsel who will form and managae the entities involved, ensure that SEC disclosure and anti-fraud requirements are met, and who will work with the immigration lawyer.

Your immigration lawyer will file the EB-5 petition and other petitions on your behalf, and will advise you and work with other players on your behalf to ensure compliance with USCIS requirements. An experienced immigration attorney will also carefully review all business documents for compliance. Please feel free to contact us at the law office nearest you and put us to work for you on any of your immigration needs.

Regional Center Models: Equity vs. Loan-Based

Regional centers are authorized to operate within specific geographical areas. They accept funds from EB-5 investors, and they use reasonable methodologies to project that new jobs will be created. There are two models that regional centers use to become involved with your new commercial enterprise: The “equity” or “loan” based models.

Under the equity model, the regional center will hold equity in the new commercial enterprise and operate as a general partner, with you and other EB-5 investors as limited partners. Your role as a limited partner will ensure that the managerial requirements of the EB-5 visa are met. The regional center could also act as a licensor, under which they would enter into a licensing agreement with you as an EB-5 investor for a fee. Under this scenario, you would pay the regional center a fee, but they would not hold ownership equity in your new commercial enterprise.

Regional centers also operate under a loan-based model. Under this model, EB-5 investors can loan capital to a third party “job creator” or project developer, because the EB-5 investor is getting an equity interest in the “new commercial enterprise” of the regional center, which is actually making the loan. Normally, loans are disallowed in the context of EB-5 investments as a source of capital investment, because the investor must be an “owner” of capital that is “at risk,” rather than a mere lender who expects to be repaid. The regional center allows for a loan-based model in the EB-5 context, because stock or LLC/partnership interests in the new commercial enterprise are exchanged for the EB-5 investor’s cash investments. It is important to avoid investing with promissory notes with a promise to repay, because they have highly restrictive requirements under the EB-5 program and could be seen as a disallowed type of “loan.”

Contact Us

Whether equity or loan-based, regional centers are an excellent way to become an EB-5 investor. They make the process easier and offer many advantages. If you would like further information about the EB-5 immigrant visa or any other immigration matter, please contact our experienced immigration attorneys at The Law Firm of Shihab & Associates, Co., LPA to schedule a consultation with an attorney at an office near you.
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