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EB-5 Regional Center explained
U.S. Citizenship and Immigration Services (USCIS) designates as a regional center any business or governmental economic entity active in supporting economic growth, boosting regional productivity, generating employment, and increasing domestic capital investment (USCIS). An agency has shown to USCIS via evidence of its efforts toward the EB-5 program’s aims of stimulating the U.S. economy through foreign investment and job creation that it qualifies to accept funds from immigrant investors. EB-5 projects can be completed through the use of a regional center, which is a designated service provider for investors and developers.
Form I-924, Application for Regional Center Under the Immigrant Investor Pilot Program, and all necessary supporting papers must be submitted to USCIS by regional center operators seeking USCIS designation. Regional center projects can be developed by both local and foreign developers, and both domestic and foreign investors can participate.
The primary advantage of creating a regional center is the opportunity to make use of EB-5 investor funding. Numerous EB-5 investors choose regional centers because of the more comprehensive job development criteria. A win-win scenario is created for the investors, the developers, and the communities in which the projects will be placed as a result of this.
Comparison of direct and regional center investments in the EB-5 Program
Entrepreneurs from outside the United States who satisfy specific conditions throughout the conditional residency term can apply for green cards under the EB-5 Immigrant Investor Program. An EB-5 investor may do this either by making direct investments or by investing in regional centers.
Direct vs. Regional Center Investments: The Difference
Direct investments, as the name indicates, are investments made directly into a business without the use of an intermediary. As part of the investment process, the regional center sets up an investment fund, and investors acquire equity holdings in this fund. Depending on the EB-5 project’s form, the fund subsequently makes a loan or purchases ownership in the job-creating company. Last but not least, the job-creating firm utilizes investments made possible by the fund to generate further indirect jobs.
Due to the same I-526 petition adjudication wait periods and the same capital investment quantities for direct and regional center investments, investors face the same I-526 petition adjudication wait times and the same capital investment amounts for direct and regional center investments. However, the requirements for job generation are different.
Job-creation criteria for direct vs regional center investments
To meet the 10 full-time, permanent jobs threshold, direct investments allow investors to count solely on direct job creation. Investing with a regional center, on the other hand, allows investors to include indirect job creation in their calculation of meeting the 10-job threshold. Investors must verify the number of direct jobs created by the new commercial activity by examining the payroll records of the company. Few new, long-term, full-time positions are normally created by a new firm.
USCIS Policy Manual defines “indirect jobs” as “those held outside of the new commercial enterprise but established as a result of the new commercial enterprise.” If the new commercial entity and the job-creating entity are not the same, then these jobs include those held by employees of the job-creating entity as well as those held by employees of companies that provide “materials, equipment, or services used by the new commercial enterprise or job-creating entity.” Investing in a single project with a bigger pool of immigrant investors who can each fulfill the job creation criteria is made possible by this broader definition of employment.
An EB-5 Investor’s Decision
A thorough comparison of direct and regional center EB-5 investment strategies is essential for investors. A more active management role is required for direct investments, whereas a more passive management role is required for regional center investments. A more hands-on approach isn’t recommended for regional center investments, but a more limited position is a great fit for them.
Immigrating to the United States
The designation of an EB-5 regional center is a complicated procedure that is best handled by experts. Form I-924, which must be filled out and accompanied by supporting paperwork, is at the core of the application and must be submitted to the USCIS.
Accordingly, supporting documentation must provide accurate and trustworthy information about the center’s industrial scope, as well as the TEAs in which it will be operating. Documentation must also indicate how the center will help to build the economy in its service region.
Include, for example, a copy of Form I-924 supporting documents.
by the Matter of Ho regulations
operating and partnership agreements
one that uses well-established economic models to anticipate future growth in employment,
in a PPM, or private placement memorandum
Transactional, corporate, securities, and/or loan paperwork written by a specialist.
An actual, hypothetical, or exemplary project must be referenced in the documentation of the project. Projects that are merely hypothetical are the least likely to occur yet are still possible. These supporting documents demonstrate to USCIS the sorts of initiatives the regional center expects to undertake based on simple assumptions.
As soon as the I-924 application is granted and the developer receives the necessary finance, actual construction may commence. An economic and business strategy should be included in this sort of project’s documentation, along with any other relevant paperwork.
Exemplifying a certain project type and submitting a completed Form I-526 for an anonymous investor are both acceptable methods of applying to an exemplar project. USCIS considers these projects to be pre-approved, and as a result, the only new material it has to check is the identification of the funding source.
Gathering the necessary documents might take many weeks or months to complete. It may take up to a year for the USCIS to process your application after you submit it. However, Immiggreat applications are routinely accepted within seven months of submission.
An EB-5 Regional Center’s Day-to-Day Management
A regional center’s duties extend beyond project management to include USCIS compliance, I-526 petition filings by investors, and I-829 petition paperwork preparation by investors.
The regional center is responsible for ensuring that state and municipal securities laws comply with the US Securities Act of 1933, which is enforced by the SEC and other government agencies.
Regional centers must also keep track of job creation statistics from their projects and complete Form I-924A on or before December 29, each year, to verify that they are still meeting the standards for regional centers. If this form isn’t submitted, the agency’s status as a regional center will be revoked.
EB-5 investors’ I-526 applications can also be submitted via designated regional centers to gain conditional residency for investors. Each petition must include a copy of the project’s actual or exemplary documentation. While investors must complete Form I-829, Petition by Entrepreneur to Remove Conditions—the final petition in the EB-5 visa application process—the regional center must compile and deliver the requisite supporting papers.
Investment Opportunities in Regional Centers Other than New York
The process of establishing a regional center is time-consuming and costly. For those who have the resources and time, this may be the best choice, but for others, joining or renting an EB-5 regional center may be a better match.
There are 811 regional centers certified by the USCIS as of November 2019. More than 20 states and Washington, D.C. are served by our Network’s 14 regional centers, which were approved by the USCIS. To get the benefits of regional center designation without incurring the additional expenditures, stakeholders might rent a regional center. In most cases, the most appropriate alternative is made crystal evident by the business’s requirements.
Get in touch with Immiggreat right away for help with everything from deciding on the optimal investment plan to submitting USCIS petitions and applications.