How will I know if my EB-5 investment at risk?

The EB-5 program is not about good returns on investment. It is about obtaining permanent residence (a green card) in the United States. Choosing a proper regional center project involves due diligence. You should hire an EB-5 immigration attorney and possibly a due diligence specialist.

We do have some standards to evaluate a project. First you need to look at the history of the project, the approval rates of I-526s and I-829s. If the approval rates are 100 percent, then it is trusty.

You need to look into the language in the project documents to ensure there is no redemption agreement or impermissible debt arrangement, and pay special attention to how the exit strategy portion is phrased. The EB-5 regulation states that if the investor is individually guaranteed the right to eventual ownership or use of a particular asset in consideration of the investor's contribution of capital into the new commercial enterprise, such as a home (or other real estate interest) or item of personal property, the expected present value of the guaranteed ownership or use of such asset does not count toward the total amount of the investor's capital contribution in determining how much money was truly placed at risk....If you are guaranteed the return of a portion of your investment, or a rate of return on a portion of your investment, the portion of investment is not at risk.

There are many criteria in the due diligence analysis, and you might want to engage a due diligence specialist. However, generally speaking, good EB-5 projects do not offer good returns.

Your investment is "at risk" as long there are no guarantees for you to receive repayment of your investment whether or not the entity is a success.

There cannot be any guarantee of any amount of the investment to be returned. You should retain immigration counsel to review the project for immigration compliance, and an investment adviser for business/investment advice.

There can be a return ON the investment, but the project cannot state to you there will be a RETURN of the investment amount of any part of it. If there is a guarantee to return any part of the investment, the USCIS will consider this to be redemption, which is not allowed. With the assistance of your experienced EB-5 immigration attorney, immigration due diligence can be performed on the project, while your financial and investment advisers can perform a finial and investment viability due diligence on the project. On this basis you can make a decision as to the possibility to receiving your permanent residency status and the probability of receiving funds back through the sale of your interest in the new commercial enterprise in which you invested your personal funds at fair market value.

If you are looking for good return on your investment, i.e., IRR (investment return rate), then EB-5 is not where you want to put your money. EB-5 is an immigration program, thus you want to focus on whether the project or the regional center has had a great approval track record, not what kind of interest or rate of return you will get. There are several regional centers that have had excellent approval track records on both I-526s and I-829s, as well as return of the principal investment after I-829s have been approved. This type of prior track record is about all you could expect in terms of a guarantee, as the EB-5 investment cannot have any guarantee on the rate of return or approvals.

At risk means that the money is at risk of being lost. You cannot have a guarantee of a return of investment or return, and the investment cannot be secured against the assets of the business. You should have a lawyer review the documents to make sure the funds are actually at risk or you may submit an application, wait 13 months and then get a denial.