An EB-5 project offering package is a significant set of documents in the EB-5 visa program. It is essential for developers seeking EB-5 funding, as it ensures regulatory legal compliance, maintains transparency with EB-5 investors, and provides the necessary documentation to attract foreign capital.
Key elements of the offering package include a project budget, feasibility and economic studies, a business plan, limited partnership agreements, escrow agreements, and private placement memorandums. These components collectively support the project’s application for a regional center license and enable developers to secure investments while safeguarding investor interests.
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What is the offering package?
Typically spanning 500–1,500 pages, this package combines financial, legal, and economic documentation that supports both the project’s regional center application (Form I-956) and its investment marketing efforts.
The developer must produce this package to secure EB-5 funding, ensure compliance, and maintain transparency with EB-5 investors.
Why It Matters
Developers need an offering package to:
- Comply with USCIS and SEC regulations.
- Show transparency to investors with clear project details and risks.
- Protect investors through formal agreements and disclosures.
- Qualify for regional center designation and demonstrate job creation.
Who Prepares it?
- · Immigration Attorney – prepares the I-956 filing and ensures USCIS compliance.
- · Corporate & Securities Attorney – drafts investment documents like the PPM and LP agreement.
- · Economist – produces the job-creation analysis (economic study).
- · Business Plan Writer – crafts a USCIS-compliant project plan.
- · Feasibility Consultant – assesses commercial and financial viability.
- · Escrow Bank – secures investor funds until release conditions are met.
What is the purpose of the EB-5 offering package?
The primary use of this package is to support the developers’ application for a regional center license through Form I-956, enabling the project to qualify for the EB-5 visa program, and to present the project to potential EB-5 investors to pool the capital necessary for the project’s development. Other objectives include:
1. Regulatory Compliance:
The offering package ensures that the EB-5 project complies with U.S. Citizenship and Immigration Services (USCIS) regulations and Securities and Exchange Commission (SEC) laws, allowing developers to raise capital from foreign investors effectively.
2. Transparency:
It provides detailed information about the project, including purpose, budget, location, economic viability, and potential returns. This information is crucial for EB-5 applicants to assess the project’s feasibility and possible risks.
3. Investor Assurance:
The package includes documentation such as the Limited Partnership Agreement, Escrow Agreement, and Private Placement Memorandum, which outline the rights and responsibilities of investors, the management structure, and the financial safeguards in place to protect investors’ funds.
What’s the Timeline?
Developers can raise funds from EB-5 investors once they obtain the regional center license. They can manage their own EB-5 project or partner with an existing center. Typically, approval takes 3 months to 1 year, and they need to hire third-party contractors, like lawyers and accountants, to create the offering package. An immigration lawyer handles the application process.
Key Components of an EB-5 Offering Package
1. Project Budget
The package must include the project’s purpose, the type of development, the location, and the construction budget.
2. Feasibility Study
The feasibility study is conducted by third parties to assess project viability and value, typically costing developers $20,000 to $30,000 and taking three to four weeks to complete. It is recommended to order the feasibility and economic studies early in the setup of the offering package.
3. Economic Study
This job report by an EB-5 economist analyzes construction numbers and project revenue to calculate the direct and indirect jobs created. Using software, the economist evaluates project costs and job categories to provide insights into the total number of jobs generated by the project.
4. Business Plan
A business plan for an EB-5 project includes technical details. An expert writer is hired; sometimes the same EB-5 economist handles it. Costs range from $5,000 to $15,000, and the process takes a few weeks. Before it, the economic study must be completed.
5. Limited Partnership Agreement
A limited partnership agreement (LP) is essential for EB-5 investors, who act as limited partners (LPs) in a fund managed by a general partner (GP). Each investor contributes an investment amount of $800,000, which is pooled with other investors’ contributions. The LP agreement defines investor rights, investment duration, and outlines risks such as fund returns and source issues. It is part of the required offering documents for the investment.
6. Escrow Agreement
Many EB-5 projects use escrow banks, which act as intermediaries to hold funds in secure bank accounts. This process involves documentation and ensures that the invested money does not go straight to the fund but first enters escrow. Escrow provides investors with security by releasing funds only when certain conditions are met, making it a crucial component of EB-5 projects.
7. Private Placement Memorandum
A securities lawyer drafts the private placement memorandum (PPM) to ensure compliance with SEC regulations. The PPM is a disclosure document that details the entire deal, including the business plan, economic report, and appraisal or feasibility report. The same attorneys who create the PPM also prepare the subscription documentation, which confirms that investors have read the PPM and are committing to the project.
9. Memorandum of Understanding and loan documentation
A signed Memorandum of Understanding (MOU) or letter of intent establishes the terms for a Newly Created Entity (NCE) or Special Purpose Vehicle (SPV) that pools EB-5 investor capital for a project. The fund can function like a debt fund, providing loans to a Job-Creating Entity (JCE) for development. Various financing options can be utilized, including senior loans, mezzanine loans, and equity investments. While detailed loan agreements can be drafted later, only an MOU is required for the initial I-956 application, underscoring its importance in structuring project financing.
10. Subscription documentation
The subscription documentation summarizes the investment process and indicates that the signer has reviewed the offering package.
Who does what?
Each professional has a specific role in the process, ensuring that all necessary documentation and studies are appropriately handled.
- · Feasibility Report/Appraisal: A third-party feasibility company.
- · Escrow Documentation: The escrow bank, in collaboration with the project’s attorney.
- · LP Agreement and Private Placement Memorandum (PPM): Corporate securities attorney.
- · Business Plan: Business plan writer.
- · Economic Study: EB-5 economist.
- · I-956 petition: EB-5 immigration lawyer
