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EB5 INVESTORS MAGAZINE

Investor’s Checklist for an EB-5 Compliant Business Plan

by Lauren Cohen

Writing a compliant business plan in the complex and cumbersome EB-5 world is a refined area of expertise. The writer needs to be intimately familiar with EB-5 requirements, while understanding the importance of developing a business plan that can actually be implemented and defended.

Business plans submitted with EB-5 visa petitions must provide a basis for USCIS to draw “reasonable inferences” about the business’s potential viability and success.  The more detailed the plan, the better the opportunity for the reviewer to assess the potential success of the business, which will translate to a higher likelihood of approval.  A truly credible business plan contains detailed and verifiable information about the new enterprise that will be supported by the EB-5 investment.

EB-5 business plans, whether for regional center or direct investment projects, must meet the requirements set forth in Matter of Ho. It is crucial that EB-5 investors and facilitators understand the Matter of Ho elements and ensure that the business plan submitted to USCIS contains each element in sufficient detail, is presented professionally, and includes all supporting documentation and data.

Business Description

The main purpose of the business description is to give USCIS an overview of the (proposed) business, including the (i) industry, (ii) business purpose, operations, and personnel, (iii) mission statement, (iv) business history and future plans, and (v) other information that will provide the agency with an engaging overview of the business. In the description, USCIS needs to get a handle of the concept, business model and likelihood of success. 

Business Structure

EB-5 investors must generally invest in a for-profit, new commercial enterprise formed for the ongoing conduct of lawful business, including sole proprietorships, partnerships, holding companies, joint ventures, corporations, business trusts, or any other lawful entity.  Although the EB-5 investment visa has no specific requirement for the type of business structure, this choice is very important in terms of legal, tax, and management considerations. The three most common EB-5 entities are limited partnerships, corporations, and limited liability companies.

Marketing Plan with Target Market Analysis

A meaningful marketing plan and budget will assist USCIS in determining the likelihood of the business’s success.  A well-developed marketing plan is a vital component of any business; it is the roadmap for promoting the product or service being sold, enabling the business to get noticed by the “right” people–the target market. A business that attempts to operate without a marketing plan will likely end up wasting money, losing sales, and ultimately might fail.  Notably, in an EB-5 business plan, the marketing plan must often address two different target markets –the prospective INVESTORS in the business, and the actual END-USERS ofthe business’s products or services.

Personnel Experience

This element of the business plan will normally include an explanation of the business’s management, key personnel, and their experience, management philosophy, backgrounds, organization, and functions. A description of personnel functions and the use of visuals, such as tables and organizational charts, are effective. The organizational structure should be sound and follow generally accepted business practices for similar businesses.

Competitive Analysis

Competitors should be analyzed in terms of market penetration, prices, jobs, products, services, and other relevant factors.  It is important to emphasize the differences between existing businesses and the new enterprise. Understanding the weaknesses and strengths of the proposed business when compared to competitors paints a picture for USCIS of the challenges and advantages that the business is likely to face and demonstrates an objective approach.

Required Licenses and Permits 

Operating a business means addressing all required permits and licenses. Federal and state licenses are generally required of businesses that fall under categories important to the general public, or those that provide professional services vital to the public welfare.  Local licenses usually fall under the category of occupational licenses or business taxes, and possibly sanitation or similar permitting for specific businesses.

Timetable for Hiring

The EB-5 program requires the new business to create a minimum of 10 new full-time jobs for a period of two years and/or to save 10 jobs that would have otherwise been eliminated.  A compliant business plan needs to demonstrate that each investment will create 10 jobs through a detailed staffing plan, including a clear timetable for employee hiring, ideally in the narrative and visually.

Job Descriptions

Job descriptions are an essential part of any business organization and an important element of a business plan. Job descriptions ensure that USCIS understands the jobs that will be created by the business, and the roles and responsibilities of each job. They should be practical, clear, and accurate, and directly correlate to the project.

Budget and Financial Projections

The business plan must be well-documented with financial projections including sales, costs, budgets, and income over a period of five years. The budget must also show the basis and assumptions for these projections. It must show the source of funds to start up, support, and maintain the business, as well as detailing the uses of funds raised from investors. All financial projections must be based upon generally accepted accounting principles and reasonable business models.

As the most critical piece of the EB-5 puzzle, the business plan process can be overwhelming.  The key is that you don’t have to know everything—you just have to know enough about the process to understand it and then hire experts to develop your business plan, preferably a trusted authority with the education, experience, and expertise to deliver success.

 

Lauren Cohen

Lauren Cohen

Lauren Cohen is an EB-5 immigration attorney and the president and founder of e-Council, Inc. and is located in Raton, Florida.

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