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EB-5 Job Creation Calculation
EB-5 Job Creation
The primary goal of the EB-5 program is to attract foreign investment in U.S. businesses in order to generate jobs. As a result, the fundamental criteria for the EB-5 program is that each investment creates at least 10 full-time permanent employment in the United States.
These jobs are measured differently depending on how the investment is made: direct investments only count direct employment; regional center investments count direct, indirect, and induced jobs.
Jobs that are direct, indirect, or induced
Direct jobs are those that are produced directly by the new commercial business that receives the investment. These are often continuous operating employment for the new firm, although they may include direct construction positions if the construction process lasts two or more years. Again, only direct employment may be included against the program’s job creation criteria for foreign nationals who invest directly in an enterprise.
Indirect employment is those that are produced as a consequence of the EB-5 project’s purchases of products and services from local businesses. Construction materials, operational equipment, and other locally manufactured supplies are examples of goods. Building maintenance to legal counsel—any professional service that a firm could hire a local company to undertake.
Unlike direct and indirect employment, which are produced as a consequence of the project’s payroll and spending, induced jobs are created as a result of employees spending their income. As the new firm generates revenue for its employees, these employees spend part of that cash on local goods and services, thus stimulating the local economy.
While any project can include qualifying direct jobs, a regional center must be linked with the project for indirect and induced workers to be classified as EB-5 jobs. A project developer has the option of applying for regional center designation or renting an existing regional center with the required geographic scope. Because regional centers may include indirect and induced employment in a project’s job creation total, partnering with a regional center virtually always results in positive job creation figures. Only indirect and induced employment can be counted for some initiatives; in such circumstances, the project must be financed through a regional center.
How to Determine EB-5 Job Creation
In most cases, calculating the number of jobs produced by an EB-5 project necessitates the aid of an economist, who produces a report based on approved economic or statistical methodology. The two most commonly used models in this process are RIMS II from the US Department of Commerce and IMPLAN from MIG, Inc.
Both RIMS II and IMPLAN are input/output models that take into account industry linkages to determine the total economic effect of the project in the region. The models provide a final demand multiplier, which is applied to expenditures to calculate job creation.
The major goal of this economic analysis is to show the USCIS that if the business plan and budget are followed, the project would produce the required number of employment. When an investor files his or her I-526 petition, this report serves as proof that the EB-5 program’s employment creation criteria will be satisfied. When the investor files Form I-829 two years later, this report is utilized in conjunction with verification of actual expenditures to demonstrate that the required number of jobs were created.
The majority of projects produce employment from both construction and operations, and these two job kinds are counted differently. Construction employment is computed based on expenditures rather than the actual number of persons working on the project. Operations positions, on the other hand, are estimated based on the actual number of workers employed full-time, which may also be computed based on revenue.