Six “Must Ask” Due Diligence Questions for EB-5 Investors

1) What kind of professional consultation should EB-5 investors seek before investing in an EB-5 project?

One of the most important advisors will be a tax attorney, or someone who’s gonna advise him on the tax consequences of becoming a permanent resident. A tax attorney will advise about income, and in the EB-5 case about state and gift tax as well.

2) Who does the due diligence on the regional centers?

This should be done by a private investment firm like LCR Capital Partners, that does very intense and deep due diligence related to your investment.

We at LCR Capital Partners have transformed the EB-5 investment program into a standardized, transparent financial product that maximizes job creation, mitigates risk and protects investors’ principal.

3) Should investors be concerned about projects that are 100% EB-5 financed?

EB-5 investors should question that and they should probably also question the attorney they’ve chosen, unless their attorney can explain to them why the economic methodology applies under the current rules.

4) For the 10 full time jobs, what is the consideration for “full time”?

A full-time job is one that requires at least 35 working hours each week. While job sharing is permitted, that is multiple workers sharing one full-time position, part-time jobs added up do not equal full-time jobs.

5) Some EB-5 projects require a 1 million USD investment and others only 500k. Why does this difference exist?

For most EB-5 projects, the minimum investment required for the EB-5 Investor’s Visa is $1 million. This sum may be reduced to a half a million dollars if the enterprise that’s being invested into is situated within a targeted employment area. To be eligible for an EB-5 visa, the investment must create at least 10 full-time jobs for U.S. workers. This means U.S. citizens, lawful permanent residents, and other qualifying U.S. workers.

There are two basic requirements for demonstrating investment into a new commercial enterprise. First, the enterprise must be formed after November 29th, 1990, or restructured or reorganized in the case of a pre-1990 business. Second, the enterprise must be commercial, that is any for-profit enterprise formed for the ongoing conduct of lawful business.

6) Will I meet the EB-5 requirements even when I’m not actively involved in the management of the commercial enterprise?

EB-5 regulations require the investor to be involved in the management of the new commercial enterprise either through day-to-day operations or policy formulation. Being a limited partner under a state’s Limited Partnership Act does satisfy this requirement.

Permanent resident status is not immediately acquired. Immigrant investors, their spouses, and dependent children are subject to a two-year period known as conditional permanent residence. Only 90 days prior to the expiry of this two-year period will the investor be eligible to file a petition to remove the conditions on this residence.

It’s possible to apply for EB-5 status either inside or outside the United States. Initial application is made on form I-526.