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EB-5 Guide

STEP 2: How to Select an EB-5 Project

By Christian Triantaphyllis

The process of selecting an investment project can be an extensive process for EB-5 investors. There are steps to take in order to make this monumental decision in an efficient and effective manner. Surrounding oneself with legal and financial advisors is imperative when making a decision on selecting an EB-5 project, as there are both immigration law compliance issues and financial risks involved with the process. The following points focus on regional center project related factors to consider when making this important decision.


An EB-5 regional center is a U.S. entity, publicly or privately owned, that is designated by U.S. Citizenship and Immigration Services (USCIS) for participation in the EB-5 Immigrant Investor Program to promote economic growth. Each regional center has jurisdiction over a specific geographic area in order to concentrate pooled EB-5 investment. There are currently more than 720 USCIS-designated regional centers, which can seem overwhelming to a prospective investor when selecting a regional center project in which to invest. Actions taken to select a regional center include, but are not limited to, the following:

  • Confirm that the regional center has been designated by USCIS by requesting a copy of the regional center’s designation letter and reviewing the USCIS list of approved EB-5 regional centers on the USCIS website.
  • Request evidence of the regional center keeping compliant with the USCIS I-924A annual reporting requirements, such as I-924A filing receipts.
  • Perform due diligence on background of regional center operators.
  • Request information on track-record of EB-5 investors’ approval of forms I-526 and I-829 petitions.
  • Request copy of the sponsorship agreement between the regional center and EB-5 project to ensure appropriate affiliation with regional center is in place.


The EB-5 project selection process involves evaluating and assessing a project from both a financial perspective and immigration law perspective, as the main goals of the investor typically involve obtaining the green card to become a permanent resident of the U.S., and to eventually receive their investment funds back from the EB-5 project. An EB-5 investment offering for financing a project will include documents involved with the issuers and the project developers. Actions taken to select an EB-5 project include, but are not limited to, the following:

Business Plan for the Project – Review the business plan for Matter of Ho compliance, including the following items:

  • Construction timeline for the project
  • Construction budget for project
  • Job creation timeline
  • 5-10 year pro forma for the project
  • Pictures or renderings of the project
  • Appraisals
  • 3rd party market study regarding the feasibility of the project
  • Permits and government approvals
  • Deeds/leases
  • General contractor agreement
  • Targeted Employment Area analysis

Economic Impact Study – Review methodology, reliability of study’s inputs such as project expenditures and operational revenue, and check for tenant-occupancy issues.

EB-5 Investment Contracts – Review any of the following documents for EB-5 compliance matters, as applicable:

  • Private Placement Memorandum
  • LLC/LP agreement
  • Escrow agreement
  • EB-5 loan documents

Project Development Documents – Review any of the following documents for EB-5 compliance matters, as applicable:

  • Senior loan documents
  • Bridge loan documents
  • Evidence of equity Investment
  • Background and experience of project developers

When reviewing EB-5 project documents, certain language should be analyzed for immigration law compliance and financial due diligence purposes. For example, the use of the word “guarantee” is sensitive in EB-5 investment documents, as the return of the EB-5 investor’s investment funds cannot be guaranteed by the New Commercial Enterprise (NCE). However, there are certain guarantees that are permissible under the EB-5 program. The types of guarantees that may be written into the offering documents are as follows:

  • Guaranteed refund of capital contribution to the EB-5 investor by the NCE upon denial of I-526 or Conditional Lawful Permanent Resident admission.
  • Repayment of the EB-5 investment from the NCE to the job creation entity (JCE) can be guaranteed by the JCE or related company of the JCE, perhaps written in the term sheet.  
  • Construction completion guarantee provided by the JCE to assure that sufficient job creation will occur on behalf of the EB-5 investors.

The EB-5 backlog and extended EB-5 immigration timeline for certain nationalities must be discussed in the project investment documents. Long backlogs create a need for language in the investment contracts regarding child age-out concerns and clarifications on timeframes for investors receiving credit for job creation. Aspects of how the EB-5 funds are handled by the project must also be incorporated into the contracts due to extended EB-5 timelines, such as anticipating longer EB-5 loan terms and describing options for redeployment of EB-5 investment funds.


EB-5 regulations require that an EB-5 investor receive equity in the NCE in return for the EB-5 investment, and therefore, the investor cannot loan the investment funds to the NCE. However, the two main types of EB-5 projects in the market are the equity model and the loan model. The equity model EB-5 project entails the NCE using the EB-5 investor’s funds to make an equity investment into the development project, known as the JCE, while the loan model entails the NCE using the EB-5 investor’s funds to loan to the JCE to develop the project. The following diagram illustrates the use of the two models:

In either scenario, the EB-5 investor will have his or her own investment terms with the NCE, and the NCE and JCE will have their own investment terms, and the project will have the responsibility to create a sufficient number of jobs for the EB-5 investors and repay the investment funds back to the NCE. Regarding the loan model, the EB-5 loan documents will discuss whether the EB-5 loan is in a senior or junior position with the project borrower, and whether or not the EB-5 loan is secured or unsecured by the project. Each investor will determine which investment structure he or she prefers when selecting a project to invest in, as either structure works for the EB-5 program as long as the investment is structured in an EB-5 compliant manner.


As of Nov. 21, 2019, new EB-5 regulations went into effect in which USCIS eliminated the ability of a U.S. state or local government to designate certain geographic and political subdivisions as high- unemployment areas in order to qualify as a targeted employment area (TEA). Instead, USCIS will now make such TEA designations and will limit the make-up of census tract-based TEAs in order to help ensure TEA designations are done fairly and consistently. The method in which a TEA is designated so that an EB-5 project qualifies for the $800,000 investment level rather than the $1,050,000 investment level, has left potential EB-5 investors with some confusion.

A TEA is defined by USCIS as a rural or high unemployment area that has an unemployment rate of at least a 150% of the national average.

  • Rural TEAs

Under the new EB-5 regulations, a “rural area” is defined as any area outside of a metropolitan statistical area or a city or town with a population of 20,000 or more. In practice, to be qualified as a rural TEA, an EB-5 investor in the I-526 petition must include in the filing the U.S. census data demonstrating that the location of the EB-5 project is one that is both outside a metropolitan statistical area and has a population of less than 20,000. USCIS will review the I-526 petition and in that process will review the census tract data to approve the TEA qualification.

  • High Unemployment TEAs

Under the new EB-5 regulations, an area in a metropolitan location may be designated as a TEA if the investment is located in a metropolitan statistical area, a county within a metropolitan statistical area, or a city or town with a population of 20,000 or more, in which the investment is principally doing business and has experienced an average unemployment rate of at least 150% of the national average unemployment rate. The area is also encompassing the census tract in which the investment is principally doing business, which may include any or all census tracts directly adjacent to such tract and has a weighted average of unemployment for each census tract of at least 150% of the national average unemployment rate. In practice, to be qualified as a high unemployment TEA, an EB-5 investor in the I-526 petition must include a census tract study demonstrating that either the project’s single census tract, or if necessary the study may include census tracts directly adjacent to the project’s census tract, satisfies the 150% unemployment rate requirement. USCIS does not automatically approve any particular methodology to calculate the unemployment rate for determination of TEAs, but will review the I-526 petition, for example, and in that process will review the census tract study to approve the TEA qualification.

That means that in either TEA scenario, the burden is on the petitioner to provide USCIS with reliable and verifiable evidence documenting that the area where the petitioner has invested in is rural or a high unemployment area so that a $800,000 investment qualifies for the EB-5 immigration process.

There are currently EB-5 projects in the market that qualify as a TEA under the rural qualification, and others that qualify under the high unemployment qualification. Part of the project selection process will be to review the evidence demonstrating how the project location qualifies as a TEA that will be submitted to USCIS in the I-526 petition.

As one can see, there are many factors that go into selecting an EB-5 project. An EB-5 investor can use advisors and discussion points to narrow the choices, to better perform due diligence to identify the project that meets the needs and goals of the investor from both a financial and immigration perspective.

Read about the next step in the EB-5 process: An EB-5 Investor’s Guide to Effective Due Diligence