What is an EB-5 Regional Center?
EB-5 regional centers are a core component of the EB-5 Visa Program.
While foreign investors can either make a direct investment or go through a regional center program, the latter is by far the most popular option.
In fact, 95% of EB-5 investors choose to invest in regional center projects.
In this guide, we explore EB-5 regional centers. We will examine the benefits, how they stack up against other EB-5 investment options and other key information.
What is an EB-5 regional center?
EB-5 regional centers are entities designated by the United States Citizenship and Immigration Services (USCIS).
They are required to:
- Increase economic activity and growth
- Boost regional productivity
- Create jobs
- Increase domestic capital investment
An EB-5 regional center connects investors with project developers. They pool investment funds, which are used to fund large-scale projects. These often involve real estate development or local infrastructure.
EB-5 regional center vs direct investments
EB-5 investors can secure a Green Card in one of two ways. They can either make a direct investment or go through a regional center.
A direct investment is basically any investment that is not made through an EB-5 regional center project. This can include:
- Starting a business
- Buying an existing business
- Investing in an existing business
The minimum investment amount for both options is the same. Investments in a TEA (targeted employment area) start at $800,000. For non-TEA projects, it is $1,050,000.
The benefits of EB-5 regional centers
Below are some of the key benefits of investing through an EB-5 regional center.
Passive investment
Regional Centers pool funds from multiple EB-5 investors to finance large-scale projects. However, direct investment projects are often funded by one investor.
As a result, EB-5 regional centers offer a much broader range of investment options.
Job creation requirement
One of the main criteria for the EB-5 program is the creation of at least 10 full-time jobs per investor for U.S. workers.
Unlike the direct investment option, EB-5 regional center projects can count both direct and indirect employment towards this requirement. Let’s take a look at what both of these terms mean.
As the name suggests, direct jobs are those created directly by the job-creating enterprise. This would be those working for an EB-5 business that can be verified through payroll records.
The USCIS policy statement defines indirect jobs as “those that are held outside of the new commercial enterprise but are created as a result of the new commercial enterprise.”
Indirect jobs can be those held by employees of a separate job-creating entity. They can also include those who produce the following that are used by the business:
- Materials
- Equipment
- Services
So, what does this mean for an investor?
Simply put, the job creation requirement is easier to fulfil through an EB-5 regional center. This is because the scope of what is classed as a full-time position is broader.
Control
Direct investments require active involvement in business operations. This means that direct investors play a crucial part in the daily operations and decision-making process.
On the other hand, regional center projects pool funds from multiple investors. This means you could be one of hundreds of other investors in the project.
As a result, EB-5 regional centers allow investors to take a more passive role in the day-to-day management of the business.
Of course, the level of control being a benefit is subjective. However, going through an EB-5 regional center could be the best option for those who want to take a more hands-off approach.
Level of risk
EB-5 regional center investments typically have lower return on investment (ROI) potential when compared to a direct investment project. However, while the ROI is often lower, so is the level of risk.
Another thing for potential investors to consider is the level of protection they get from going through a regional center.
The EB-5 Reform and Integrity Act 2022 introduced new measures that greatly reduce the risk of regional centers misusing funds. On top of this, EB-5 regional centers must undergo a strict application process to gain approval from the USCIS.
EB-5 regional center fees
One of the key benefits of a regional center is the investor involvement in the EB-5 project.
As we discussed, the investor is often one of hundreds of others who are part of the same project. As a result, they play a passive role in the day-to-day running of the business.
Instead, the EB-5 regional center operator looks after the project. This includes the employment creation side of things.
However, this comes at a cost, as regional centers charge a fee for their services. The average admin fee can be between $80,000 and $85,000. This is in addition to the other costs associated with the EB-5 Visa.
How to find an EB-5 regional center
Like any other type of investment, you must pick a suitable EB-5 investment that fits your needs and goals.
The first step is understanding the EB-5 Visa process and ensuring you meet the program requirements. For example, you must be able to invest a minimum of $800,000 in a TEA or $1,050,000 in a non-TEA project.
The next step is to find a regional center project in which to invest. The USCIS publishes a complete list of approved EB-5 Immigrant Investor Program regional centers. Here, you will find all the USCIS-approved regional centers, the state where they operate and their ID number.
This step requires a lot of research. Speaking with an expert is recommended, as they can advise you based on your situation, needs and goals.
How Holborn can help you secure your EB-5 Visa
The EB-5 visa program offers foreign investors a pathway to permanent residency in the U.S. in exchange for substantial investment.
The program offers a wide range of benefits, including the chance to live and work anywhere in the U.S. And while the EB-5 Visa is not a citizenship by investment program, it can lead to U.S. citizenship.
Download our factsheet to learn more about the EB-5 Visa. Alternatively, speak to one of our specialists.
Holborn Pass is an international leader in investor visas. We provide an end-to-end service to support you throughout the EB-5 process.
We are part of the wider Holborn Assets Group, a leading, award-winning financial advisory company with over $2 billion in assets under management (AUM).
We have successfully helped hundreds of individuals and families secure golden visas. To find out how we can assist you, book a consultation with one of our advisers.