EB-5 Q&A: What are the advantages of a direct EB-5 investment?


If there is a specific business in which you have particular expertise or desire to personally participate, there is advantage in a direct EB-5 investment.   You may think that your role in the new commercial enterprise will result in significant business profit and, thus, be a greater return on your investment.   If you are the sole EB-5 investor or one of a small group of investors, you have both the opportunity and the responsibility of preparing the business plan and organization, obtaining requisite licenses, analyzing the market and projecting quantity as well as price of sales.  Such data is essential to a successful I-526 petition related to a direct EB-5 investment.   By contrast, the regional center project will be managed by the center with your participation likely similar to that of a limited partner.   The business plan and all supporting documentation to effect the plan should be provided by the regional center before the investor commits his or her funds.  However, no matter which EB-5 program you choose, two essential requirements must to be satisfied.   The investor must meet the capital investment requirement and meet the jobs creation requirement.   


The regional center has advantages over the direct EB-5 investment.  Where a direct investment requires that the investment, itself, to creates the requisite full-time jobs, a regional center allows the use of economic modeling to determine the indirect and induced job impacts related to the investor’s capital contribution. This means that investor can count direct, indirect and induced jobs in arriving at the requisite job creation requirement. Usually the managing company will provide a complete economic analysis identifying the requisite full-time jobs the project will create.   


Success of any business would involve analysis of many variable and is usually individual business specific.