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EB-5 Question of the Week: Is my EB-5 investment guaranteed?

Pursuant to laws regulating the EB-5 program, your investment in the United States cannot be guaranteed. When the EB-5 program was implemented by the U.S. Congress in 1990, one of the key requirements of the program was that a “true investment” must take place, which according to relevant EB-5 statutes is defined as an investment that is “at risk” without guarantees or redemption rights. 

Although the investment must be “at risk,” there are certain steps that an investor may take to mitigate their risks, including by choosing a reputable regional center to host their investment. An investor must carefully consider various aspects of an EB-5 project prior to making the decision to invest. It is crucial to ensure that the EB-5 project meets the requirements of the United States Citizenship and Immigration Services (USCIS). 

USCIS has designated certain organizations, known as regional centers, to provide investors with investment opportunities and facilitate the funding of EB-5 projects. An investor will have a choice of projects for their EB-5 investment. To avoid losing their investment funds and facing immigration risks, it is highly essential for investors to carry out due diligence in choosing a suitable project.

At The American Legal Center, we only recommend top regional centers with a track record of excellence and that have repaid back all investors in a timely manner. Additionally, we conduct a thorough review of each project. Nevertheless, each investor should review all project subscription documents to ensure they are comfortable with their EB-5 investment.

Factors to consider when choosing a project for your EB-5 investment include:

1. Job Creation

An investor must create and maintain a minimum of ten full-time jobs for U.S. persons. Failure to create and maintain these jobs for the required period can lead to immigration risk. Accordingly, it is important to review a project’s business plan to ensure that this requirement is being met.

2. Location

A project’s location plays an essential role in its success. A project’s success goes hand-in-hand with the chances of investors receiving their funds back. An investor must evaluate whether the project is located in a desirable market and whether there is demand for the project.

3. Exit Strategy

The track record of the regional center in repayment of capital to previous investors is crucial. In addition to an excellent track record, a regional center must specifically outline the exit strategy for the project, including the timeline and the manner in which they plan on repaying the EB-5 investors. Generally, the two dominant forms of exit are seeking refinancing from a bank or selling the project to a third-party to obtain the funds to repay the EB-5 investors.

4. Transparency

Transparency is key to providing ease of mind to EB-5 investors. An on-site camera allows investors to monitor the progress of construction. Additionally, an investor must consider whether quarterly reporting of construction progress will be provided by the regional center.

While neither the U.S. government nor the regional center hosting your chosen project can provide any guarantees in regards to your EB-5 investment, the above are several important factors to consider prior to making an investment to reduce your risk. With over a decade of experience in the EB-5 industry, we are ready to assist you and your family navigate your way through your U.S. golden visa process. If you are interested in finding out more about the EB-5 program and its various requirements, contact our team today for an initial complimentary consultation.

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