Differences Between EB-5 Direct Investment and Regional Center Investment?

The EB-5 visa program is a popular way for foreign investors to obtain permanent residency in the United States by investing in a qualifying U.S. business. Investors can make an EB-5 investment through a direct investment in a new commercial enterprise, or through an investment in a USCIS-approved regional center. Here are the key differences between EB-5 direct investment and regional center investment:

Investment Structure

One of the primary differences between EB-5 direct investment and regional center investment is the investment structure. With direct investment, the investor makes a direct investment in a new commercial enterprise and assumes an active role in the management of the business. With regional center investment, the investor makes a passive investment in a USCIS-approved regional center, which then invests the funds in a qualifying new commercial enterprise.

Direct Investment: The investor assumes an active role in the management of the new commercial enterprise, and is responsible for ensuring that the business is successful and creating the required number of jobs. The investor is typically involved in the day-to-day operations of the business and has a say in decision-making.

Regional Center Investment: The investor assumes a more passive role in the investment and is not directly involved in the management of the new commercial enterprise. The regional center assumes the responsibility for managing the funds and investing them in a qualifying new commercial enterprise. The investor typically does not have a say in the day-to-day operations of the business.

Job Creation

Another key difference between EB-5 direct investment and regional center investment is the job creation requirement. To qualify for an EB-5 visa, the investment must create a certain number of jobs in the United States.

Direct Investment: With direct investment, the investor is responsible for directly creating the required number of jobs within the new commercial enterprise. This can be challenging, as the investor must assume an active role in the management of the business and ensure that the business is successful and creating jobs.

Regional Center Investment: With regional center investment, the investor can rely on indirect job creation, which includes jobs created not only within the new commercial enterprise but also within the regional center’s affiliated businesses. This can be easier to achieve, as the job creation can be spread across multiple businesses.

Management Responsibility

The responsibility for managing the investment also differs between EB-5 direct investment and regional center investment.

Direct Investment: With direct investment, the investor assumes an active role in the management of the new commercial enterprise and is responsible for ensuring that the business is successful. The investor is typically involved in the day-to-day operations of the business and has a say in decision-making.

Regional Center Investment: With regional center investment, the regional center assumes the responsibility for managing the funds and investing them in a qualifying new commercial enterprise. The investor is not involved in the day-to-day management of the business and does not have a say in decision-making.

Investment Amount

The minimum investment amount for EB-5 direct investment is $1 million, or $500,000 if the investment is made in a targeted employment area (TEA). The minimum investment amount for regional center investment is also $1 million, but the investor may be able to make a qualifying investment of $500,000 if the investment is made in a TEA.

Direct Investment: The investor must invest a minimum of $1 million in a qualifying new commercial enterprise, or $500,000 if the investment is made in a TEA. The investor assumes a higher level of risk with a direct investment.

Regional Center Investment: The investor must also invest a minimum of $1 million, but may be able to make a qualifying investment of $500,000 if the investment is made in a TEA. The investor assumes a lower level of risk with a regional center investment, as the investment is spread across multiple businesses.

Risk Profile

The risk profile of the two investment options also differs between EB-5 direct investment and regional center investment.

Direct Investment: EB-5 direct investment carries a higher risk profile, as the investor assumes an active role in the management of the new commercial enterprise and is responsible for its success. The investor must ensure that the business is successful and creating the required number of jobs.

Regional Center Investment: EB-5 regional center investment assumes a lower risk profile, as the regional center assumes the responsibility for managing the funds and investing them in a qualifying new commercial enterprise. The investor is not directly involved in the management of the business and assumes a more passive role.

Geographic Location

The geographic location of the investment is also an important factor to consider when choosing between EB-5 direct investment and regional center investment.

Direct Investment: EB-5 direct investment can be made in any qualifying new commercial enterprise located anywhere in the United States. This gives investors the flexibility to choose the best investment opportunity regardless of location.

Regional Center Investment: EB-5 regional center investment requires investors to invest in a United States Citizenship and Immigration Services approved regional center, which is typically located in a designated TEA. The investment must be made within the geographic boundaries of the regional center.