11 Jul EB-5 Difference Between Regional Centers and Direct Investments Podcast
When it comes to investor visas, no other program facilitates the path to US citizenship quite like the EB5 visa program. Although it requires a relatively hefty investment of at least $1 Million (or $500,000 in certain circumstances) with a direct pathway to a green card, the EB-5 program has risen to popularity over the last few years. The increase in the program’s popularity is not altogether surprising. USCIS, the government agency governing the EB-5 programs, places no no requirements with respect to age, business training and experience or language skills. Investors granted the EB5 status enter the US as conditional lawful permanent residents (LPR) on a provisional green card, and need not be continuously and physically present in the United States, and they can maintain business and professional relations in their country of origin.
For high net worth foreign investors looking to relocate to the US, two different options for investment: the direct investment EB5, and the Regional Center project. Both programs have their own requirements to be met, however, they both carry with them similar benefits and set-backs. Either option will allow the investor to enter the, and both ultimately lead to citizenship after a five year period. The direct investment EB5, as its names implies, requires that an investment of at least $500,000 in areas designated with high unemployment (or a TEA – Targeted Employment Area), otherwise $1,000,000, be made directly in an established or newly created business. A Regional Center, on the other hand, is usually a partnership which requires an investment of $500,000 firm in a project that has been granted the ‘Regional Project’ designation, combining capital from several different investors to be collaboratively used for a single project.
In a nutshell, the biggest difference between the two projects is ownership. In a direct investment, the investor is in charge of the business he has created, usually taking a hands on role, resulting in increased returns and reduced risk of green card denial or revocation. In a Regional Center project, however, the EB5 visa applicant typically is primarily a passive investor, and the day to day management of the business is left to the project administrators.
As with any investor visa, there are certain conditions that need to be met in addition to a capital investment for both EB5 options. Most important amongst these is job creation. Direct investment EB5s are required to provide 10 full-time jobs within 2 years of visa issuance. These 10 jobs must be direct employment positions, meaning that the business must directly hire employees in order for these positions to count towards the requirement. By contrast, a Regional Center is required to provide 10 jobs for each $500 invested, a fulfillment which can be met through indirect employment, meaning that jobs created as a result of the project, but not directly in the project, also count towards the requirements.
In short, a direct EB5 investor is an entrepreneur coming to the US to establish his/her own business in the US through a capital investment of at least $1,000,000 (or $500,000 in a TEA), while a Regional Center is a U.S. government approved organization established to conduct a project and collect investments with an investment of $500,000. Still, despite their differences, both programs require the investment must be at risk and the source of the investment must be lawful, and both can lead to citizenship after a period of five years.
Listen to the podcast here.