How does an EB-5 direct investment differ in filings and fees?
I own a small company in New York and we have a personal relationship with an EB-5 investor who wants to invest $1 million in our company as an equity investment. My local regional center said they do not help with direct investments. How do direct EB-5 investments differ in paperwork, timeline, expenses, etc?
You may file a direct investment petition on your own with the help of a qualified immigration attorney. There is less paperwork because you do not need an economic analysis showing indirect jobs. You need to show how the investment will produce 10 new jobs.
Comparing a regional center to a direct investment is like apples and oranges. They are both fruits, but very different. Size is of course the number one difference. A direct investment in New York, such as adding a new investor/partner to an existing business, may be possible for EB-5, but it requires careful planning. For example, USCIS will want to see 10 new jobs created. If your plan does not include such hiring level, the company financial record needs to be examined to see if there is "loss" that is sufficient to make it possible for existing jobs to be counted towards the ten job creation. Having discussed the difference, when it comes to USCIS adjudication, it will be placed under the same microscope, i.e. the same procedure, same time frame, even the same USCIS filing fee.
Investing in an existing enterprise is very complicated unless it is a troubled business because of net worth/job creation aspects. It is best to start a new business that hires 10 full-time workers.
Direct EB-5 business filing will require similar documents as the documents that a regional center will prepare. Simply put, all EB-5-compliant projects must be supported by documents proving business activity and that the investment funds will lead to the required amount of job creation. This documentation for a direct investment will include a comprehensive business plan, including the details of the business activity and what kinds of jobs and how many will be created and maintained, and in your case, a partnership agreement between you and the investor setting forth the equity investment, what his share of the business will be, as well as his role in the management of the business, etc. On the investor side of the EB-5 case, he must prove the Source of Funds tracking to show how he accumulated the $1 million dollars and how he transferred the money to your business, as well as an explanation or resume that shows his education or experience that may be appropriate to manage or direct your business. All this work to prepare the I-526 petition for the investor is again the same for a direct EB-5 investment as it is with a regional center filing, with the same cost involved. It is advisable to work with a business-side EB-5 attorney to prepare your business documents to be EB-5 compliant while the investor works with a separate investor-side EB-5 attorney to prepare his immigration petition to avoid any conflict of interest.
The application process for an EB-5 direct investment or regional center is the same, as both require the filing of an I-526 petition with the same filing fee ($1,500). The difference relates to the documentation. For a regional center, they provide most of the documentation which could be thousands of pages that describe the project, the offering documents, the business plan, the economist reports, TEA documentation, etc.). The investor usually only provides source of funds documentation. For direct EB-5 investment, the documentation relates to the business purchased or invested in and covers all of the elements of the statute (including source of funds).
It depends. A direct investment done by starting your own business has no syndication or management fee(s), like those you would normally pay to a regional center. But there are direct investment opportunities out there that allow you to invest in other people's businesses - these are often structured similar to how regional centers are structured. Many regional centers (and some "scaled" direct investments) have management or syndication fees upwards of $40,000 (on top of the attorney fee(s) incurred in preparing the I-526 petition). If you want to create your own business with the investment, then you would avoid these syndication fees; but, you would still need an experienced immigration lawyer to guide you through the process and prepare and complete the I-526 petition. Direct investment petitions are usually processed in 6-12 months, while regional center petitions are taking 12-18 months. If you are interested in starting and managing your own business with the EB-5 investment, then you should pursue a direct investment. Otherwise, whether you choose a direct investment or regional center project that is run by a third party, your experience will be similar - but make sure to carefully evaluate the investment opportunities and choose a project with a likelihood of success.
Everything is pretty much the same except, as a direct EB-5 investment, you have to show the new commercial enterprise will DIRECTLY create 10 full-time jobs within two years. A regional center EB-5 investment may rely upon indirect job creation. Otherwise, the paperwork, timeline, and expenses are the same whether you file a direct EB-5 or regional center EB-5 petition. Your investor should retain an experienced EB-5 immigration attorney to represent him or her in these U.S. immigration matters.
The main difference is the amount of investment usually required ($1 million unless in a Targeted Employment Area) and that you must count only direct jobs; 10 direct full-time jobs must be created by the time of the filing of the I-829. You do not then need economic studies showing how you calculated the indirect jobs, but you will need a business plan.
They are very similar. The main difference is the way jobs are counted and the scale of the investment (direct investments are usually small, while regional center investments often pool many investors).