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How does direct EB-5 compare to regional center investment?

Can someone please share the advantages and disadvantages of doing a direct EB-5 investment as opposed to doing an EB-5 investment through a USCIS-approved regional center? Why would someone choose to do a direct investment? If there are any actual advantages to a direct investment, then why are there almost no direct EB-5 investors year after year?

Answers

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    If you wish to manage your own business, the direct EB-5 is the way to go. Also, the direct EB-5 program may not be affected by changes to the regional center program, but that remains to be seen for sure.

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    John J Downey

    Immigration Attorney
    Answered on

    The basic difference is that a regional center project allows the investor to count direct, indirect and induced employment to satisfy the 10 new jobs criteria. The advantage to a direct investment is that the investor has a more personal and direct involvement in the project. A franchise project is one where direct investment is used.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    The biggest difference in direct EB-5 versus regional center EB-5 is the way you have to create 10+ jobs. Unlike the regional center EB-5 where you could count indirect or induced jobs, the direct EB-5 must show actual jobs that must be proven with W-2s and I-9s to show that the business really created 10+ full-time, permanent jobs. It is not easy for an average new/start-up business to create that many jobs and employ them while successfully growing the business with a mere $500,000 or even $1 million, and sustain that business for 4-6 years until the I-829 is approved. Also, it is difficult for a foreign investor to start a new business in a different country where the business practices may be drastically different than what they are used to, and successfully grow and maintain that business until the I-829 is approved several years later. Since many businesses fail within 1-3 years after starting, it may not be advisable to tie your immigration benefits to the success of a new business in a new country that you may not be able to grow and sustain.

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    Robert Cornish

    Securities Attorney
    Answered on

    Direct investment means direct jobs, but per $1 million invested. This is often a good avenue for people who want to invest in ventures that might otherwise not be sponsored by a regional center. Some are large and some are small. You will need someone to perform due diligence on this sort of transaction just as much as you would a regional center investment. But quite often the direct investment is exactly that - an investment in an enterprise, rather than a loan. Regional center investments, on the other hand, count indirect jobs and direct jobs per $500,000 invested. These deals also vary in size. Most of these deals are structured as mezzanine debt in the form of equity. You need to perform due diligence on these deals as well, notwithstanding the reviews that some people say have been undertaken.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    Direct means you have to hire 10 full-time, legal, non-family employees. Calculate the cost of 10 workers at up to 4-5 years at even minimum wage, plus taxes. It will soon be apparent why 98 percent of applicants use the regional center route.

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