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What are the advantages of a direct EB-5 investment?

I am considering making a direct EB-5 investment in a private company. I was curious about the success rates of direct investments and what some the advantages and drawbacks of a direct investment compared to a regional center project?

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    Steffanie J Lewis

    Immigration Attorney
    Answered on

    If there is a specific business in which you have particular expertise or a desire to personally participate, there is an advantage in a direct EB-5 investment. You may think that your role in the new commercial enterprise will result in significant business profit and, thus, be a greater return on your investment. If you are the sole EB-5 investor or one of a small group of investors, you have both the opportunity and the responsibility of preparing the business plan and organization, obtaining requisite licenses, analyzing the market and projecting quantity as well as price of sales. Such data is essential to a successful I-526 petition related to a direct EB-5 investment. By contrast, the regional center project will be managed by the center with your participation likely similar to that of a limited partner. The business plan and all supporting documentation to effect the plan should be provided by the regional center before the investor commits his or her funds. However, no matter which EB-5 program you choose, two essential requirements must to be satisfied. The investor must meet the capital investment requirement and meet the jobs creation requirement. The regional center has advantages over the direct EB-5 investment. Where a direct investment requires that the investment, itself, creates the requisite full-time jobs, a regional center allows the use of economic modeling to determine the indirect and induced job impacts related to the investor''s capital contribution. This means that investor can count direct, indirect and induced jobs in arriving at the requisite job creation requirement. Usually the managing company will provide a complete economic analysis identifying the requisite full-time jobs the project will create. Success of any business would involve analysis of many variables and is usually individual business specific.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    The advantages are that you control the investment and have no one to blame but yourself if the project is not built and the jobs are not created on time. If you know the business this is a plus, but if you do not this would be a disadvantage. The disadvantages are that many require $1 million instead of $500,000 unless located in a Targeted Employment Area as designated by the state. For a direct project, you should probably live in the state where the project is located. For a direct project, only direct jobs count toward the 10 jobs per investor requirement.

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    Ed Beshara

    Immigration Attorney
    Answered on

    Both the EB-5 regional center project and the direct EB-5 project have their own and similar advantages. There are several different forms of financial and legal structures for the projects. The advantages will really depend on your specific goals and timelines.

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    Igor Serbinin

    Immigration Attorney
    Answered on

    The main advantage is that you are in more control over your investment. That could be bad and it could be good. Regional centers while providing good investment opportunities are more costly because of administrative and management fees; they have to pay their employees. Direct investments are more of a close business transaction with generally less investors pooling their money into a project.

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    Kyle Barella

    Immigration Attorney
    Answered on

    I find there are no advantages by choosing a direct investment over the indirect regional center path. Both options yield positive results if filed properly. Some practitioners like to say processing times are shorter, but this is simply not true. The I-526 applications are adjudicated based on the order received. The best advantage would be to speak with an EB-5 investment advisor before making any decision either way (direct or indirect).

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    Direct investments generally allow for the investor to be more involved with the business into which he or she is investing. Regional center projects give investors a more indirect role in management. There really is not any evidence that there is more success with a direct versus a regional center investment.

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