What is the process for EB-5 investors to pool money to invest in multiple businesses across several industries? What are the risks and benefits of pooling money like this, and what are the restrictions? Also, how can an investor withdraw his or her initial investment after two years to invest in other businesses?
Under a direct investment, EB-5 investors may pool their funds into a new commercial enterprise. However, each investor must meet the job creation requirement. In a regional center setting, an investment fund can be created for the purpose of investing in EB-5 compliant projects. Withdrawing your EB-5 investment must take place after approval of your I-829 petition for removal of conditions. Please consult an experienced EB-5 attorney to assure your plan is EB-5 compliant.
Usually a pooling type of arrangement is done through the use of a limited partnership or limited liability company. The individual EB-5 investors are limited partners or members of the new commercial enterprise (NCE). In regional center EB-5 cases, these NCEs can loan funds to EB-5 projects, or they can participate directly as equity investors into the project. The loan model is allowed in regional centers because the jobs that are indirectly created by the NCE loan to the project may be counted if they are supported by an economic impact study based upon reasonable job-creation methodology. Direct EB-5 investors also may choose to pool their money into one project, but the jobs must be directly created by the NCE. Pooling money in multiple businesses across different industries is possible, but the same requirements must be met: indirect or direct job creation for regional centers, and direct job creation for non-regional centers. Also, the NCE would have to be structured in a way that the jobs created in the multiple businesses can be credited to the NCE. USCIS will accept job creation by the NCE or its wholly-owned subsidiaries. As for withdrawing funds from the investment, it is not recommended until after all investors have their conditions removed.
First off, the investment must be sustained and at risk until the investor receives his/her I-829 approval (traditionally this is about 4-6 years from the time of investment). Pooled deals are common; however, an EB-5 attorney would have to determine whether the industries are acceptable for EB-5 purposes. Keep in mind the need to create 10 jobs per investor. I recommend consulting with an EB-5 attorney to further discuss your idea.
You can create an investment fund as the new commercial enterprise that makes loans or equity investments into a number of job-creating entities. Current policies allow for business portfolios within the EB-5 framework. Exiting an EB-5 investment would need to be after the removal of conditions to permanent residency, but many projects have a 5-6 year exit.
The pooling of investors'' funds can legally occur in a direct EB-5 and EB-5 Regional Center infrastructure. The best advice is to retain an experienced EB-5 attorney to advise you on how to set up an EB-5 structure to be EB-5 compliant and reach your EB-5 goals. The timing of the commitment of these funds will depend on how and when the jobs will be created and whether each multiple business should be treated as a separate or one EB-5 project.