How are investors allowed to allocate investment funds in a direct EB-5 investment?

You may use $100,000 for business operations as long as the funds are fully at-risk and committed to new commercial enterprise and job creation requirements are met. The business plan should address how these funds will be utilized.

All businesses need operating funds and within reason, yes, you would use a reasonable portion of the operation of your investment. If your project is located in a Targeted Economic Area (TEA), you only need to qualify based upon a $500,000 investment. You should obtain an appropriate ruling through your Governor, Mayor, County Judge or Supervisor regarding whether or not your project is located in a TEA based upon the most liberal interpretations.

Yes, you can use some of your investment funds to pay financing costs to unrelated third parties, purchase land, develop plans, obtain licenses, staff and the many other types of expenses involved in the development and operation of your business as long as you create 10 permanent, full-time jobs with your total investment.

If the required minimum capital is at-risk (return of initial capital is not guaranteed), the funds would be considered invested, even the $100,000 for operations. In your scenario, the $100,000, as long as it is placed in the business account and not available for you to access for other than for business use for operation, or a payroll account, should be fine.

Assuming job creation requirements are complied with, operating accounts are always part of the business formation.

Yes, you may use the remaining $100,000 for operations. This should be itemized and forecasted in the business plan. You will need to show how the funds are fully committed to the EB-5 new commercial enterprise, as well.

The allocation of funds in a direct investment is flexible if the corporate structure is correct. In the scenario that you have described, you would be able to count the full $900,000.

This will qualify, but it will require some additional explanation prior to moving forward. Please note that the investment amount may increase by December 8, 2017.

When you make a direct investment to establish and run a new business, it does not matter how the business will allocate and use the investment. The point is that you had made the investment for the operation and pursuant of the business per the business plan. If you utilize the $100,000 to pay yourself a salary, however, it may not be acceptable. However, if all the funds were put at-risk to establish and run the business, then it will be fine.

To count the funds for investment purposes, you must show they directly contributed to job creation. In this instance, it appears a portion of the funds will be required for operations and that is acceptable for investment purposes. Of course, this must be clearly explained in the business plan.