Return of the US EB-5 Regional Center program
Invest in the US for a Green Card and Citizenship. This is a phrase that has caught the attention of many across the GCC, Middle East, India, Pakistan, other Asian markets and Africa over the past few years.
The US EB-5 Regional Center Program is an investment immigration scheme developed by the US government. It allows foreign individuals to invest $800,000 passively into an approved project within the United States to obtain a green card for the investor, the investor’s spouse, and any children under the age of 21 at the time the application is submitted. This program is a direct pathway to permanent residency in the US and also a path to citizenship. Once someone holds the green card (permanent residency) for five years, they can then apply for a US passport.
What is a Regional Center?
Applicants must invest in an EB-5 approved project in the US to obtain a green card. Regional Centers are government approved administrative bodies which are specially certified to sponsor and structure these EB-5 projects and therefore, take in investors.
Under the EB-5 Reform and Integrity Act of 2022 which was introduced on March 15, 2022, government oversight on Regional Centers has greatly increased thereby creating a more secure environment for investors and applicants under the EB-5 Regional Center Program than ever before.
Regional Centers will now go through regular audits by USCIS (United States Citizenship and Immigration Services) to review where investor funds are being spent and also the progress of various projects which each Regional Center has sponsored. Regional Centers will also have to file all project related documents with USCIS prior to receiving investor funds.
The Role and Importance of a Regional Center
Many people ask if it is possible to invest in their own project and thereby obtain a green card through the EB-5 Program. The short answer is yes, this is possible. However, investing through a Regional Center in an approved project has its benefits, which has made it the more popular way to participate in the EB-5 Program for many years.
Regional Centers act as a bridge between a project and an investor. They are given certification to appropriately structure projects and they are able to oversee the project to ensure all immigration milestones are being met for investors. Oftentimes, the Regional Center may act like a lender, taking in investor funds and lending these to a project for the purposes of development with an end loan term agreed upon with the developer or business to which it is lending. Developers and businesses may prefer this way of funding as they can get lower interest rates through these loans compared to institutional and bank financing.
Qualifying a project is also one of the jobs a Regional Center takes on
New regulations under the EB-5 Reform and Integrity Act aim to create a more stringent certification process for Regional Centers, meaning each Regional Center in business will be taking on a large responsibility to investors in qualifying good projects which will be overseen by the government. Some Regional Centers may create their own projects through partnerships and relationships with local or national developers. Others may take on projects which require funding. In either scenario, there is a host of due diligence and documentation implementation a Regional Center must do, including ensuring the developer has the financial and technical capability to complete and manage a project. Most well known Regional Centers have due diligence analysts on staff or attorneys on hand who can vet projects via and ensure that the projects are well structured with clearly presented statistics that are well corroborated by proper economic reports for investors’ reference.
Aside from the heavy government oversight above, investing with a Regional Center allows investors to make a truly passive investment meaning the Regional Center oversees all the day to day management of the project through an appointed General Manager, and each investor is not required to participate in the operations of the business or project. For many investors who live in this region, this is important, as it allows the investor to stay and continue working without the immediate need to relocate to the United States. This bolsters the possibility of obtaining a green card for purposes of future planning for an investor’s family and children.
One of the main requirements of the EB-5 Immigrant Investor Program, is that each investor’s funds must create 10 full time jobs for US people. When one invests in a Regional Center sponsored project, it is the Regional Center which oversees job creation and ensures through job creation reports put together by EB-5 economists, that the money will be spent in a way which qualifies for proper job creation for each investor. Under the Regional Center program, the government allows for the use of a formula inputting the amount of funding in a project under various categories like hard and soft costs, and outputting an estimated number of jobs which will be created.
Therefore, so long as the money is spent as projected, it is assumed that the jobs have been created thus leaving little room for the risk of an application being denied due to lack of job creation. In addition, Regional Center projects can count direct, indirect, and induced jobs. This means anyone involved in the construction of a project (contractors, subcontractors, architects, engineers, etc.) although they are not on the payroll of the actual company, will still be included in the job count. Furthermore, if any businesses open around the project (such as more restaurants or a dry cleaner), then even those jobs will also be counted as induced jobs. All of this results in a higher possible job creation mechanism under the Regional Center program.
Diversification of Regional Center portfolios
There have been many economic and industrial changes which have come about due to the onset of Covid-19 which have also brought about changes in the types of projects EB-5 Regional Centers are now structuring and taking on. We are seeing a trend toward diversification of portfolios where even the most renowned Regional Centers are looking toward projects which further sustainable development goals including environmental preservation.
During the Covid crisis, many hospitality projects found themselves in a series of construction delays due to lockdowns as well as operational difficulties due to lack of travel and tourism brought about by the pandemic.
Although hospitality has been a popular segment of the traditional EB-5 Program, rather than focusing on hospitality, many Regional Centers are now looking toward EB-5 funding on projects of government relevance and importance in sectors like renewable energy, oil and gas, sustainable agriculture, and government infrastructure. This diversification not only creates a stronger and more secure portfolio for Regional Centers as a business, but also for investors who would like to choose a segment with more economic security and which is more aligned with the long-term sustainable development goals of the government.
What to look for in a Regional Center
So how does one know which Regional Center to choose for their EB-5 journey? There are very few Regional Centers in the EB-5 industry which have been around for many years allowing them to complete many investor life cycles. Those Regional Centers who have developed a track record of success have a strong background in taking on investors. Track records of success come with two aspects in minds – success in thousands of green card applications for investors, and also success in returning investor funds once the investment cycle is complete.
In addition, these older Regional Centers have the benefit of experience behind them. Many of these Regional Centers have dedicated teams specifically to service EB-5 investors and oversee their immigration process while working with each investor’s individual EB-5 attorneys. Since the EB-5 process goes on for multiple years, having a dedicated team in place ensures investor interests are always at the forefront of the Regional Center’s business.
It is also important to recognize those Regional Centers which operate as an EB-5 business. Those who operate as a real EB-5 business have the interest of their own reputation and longevity in mind. Therefore, they continue to do multiple projects, implement strong due diligence on the projects they take on, and ensure that each project is successful so that they can continue operating and taking on investors year after year.
Meet a leading Regional Center in Dubai
This coming weekend (October 9, 2022) sees the best of the EB-5 industry coming together to service EB-5 investors in the UAE. Step Global, one of the top EB-5 immigration consultancies in the UAE and MENA region, headed by Managing Director, Preeya Malik, who herself is an award-winning US immigration lawyer, has partnered with one of the leading and oldest Regional Centers in the EB-5 industry.
The Regional Center has a successful track record of over 5000+ EB-5 applications’ approvals and successful return of over $2 billion to their past investors. Step Global has 100 per cent track record of approval across all applications with over 9 years of EB-5 experience across the GCC, India, Pakistan, Africa, and the Middle East.
The two groups will be hosting an event for potential EB-5 investors at the JW Marriott Marquis Business Bay Dubai with sessions at 12pm and 4pm on Sunday, October 9, 2022 alongwith one of the most well-known EB-5 legal firms, which will also be present to answer any questions with regard to the EB-5 program and process.
Reserve your seat today for one of the most informative and in-depth EB-5 forums yet to come to Dubai.