March 7, 2024

USA EB-5 Visa – Direct Investment vs. Regional Center

By Prashant Ajmera EB-5 US Investor Visa, EB5 Regional Center Investment Visa, EB5 Standalon Investment visa, Green Card, Regional Centers, Uncategorized, US Immigration attorney, US Immigration Lawyer

Demystifying the EB-5 Visa: Direct Investment vs. Regional Center

The EB-5 visa, also known as the “Investor visa”, offers a pathway to permanent residency (green card) in the United States 🇺🇸 for foreign nationals willing to invest a significant amount of capital in the American economy. This visa program has two main pathways: direct investment and investment through a regional center. Understanding the distinctions between these options can be crucial for aspiring EB-5 applicants.

Direct Investment:

Investment: You directly invest at least $1,050,000 in a new commercial enterprise that will create at least 10 full-time jobs for qualifying U.S. workers. ‍
Benefits: Offers greater control over your investment and potentially higher returns. You have a direct say in the business operations and decision-making processes.
Drawbacks: Requires a larger initial investment compared to the regional center option. Finding and managing a qualifying investment can be complex and time-consuming. You may need to hire legal and financial professionals to navigate the process.

Regional Centre Investment:

Investment: You invest at least $800,000 ($500,000 in certain targeted employment areas) in a pre-approved regional center project. These projects are typically real estate developments, infrastructure initiatives, or other job-creating ventures.
Benefits: Lower investment threshold compared to direct investment. Less hands-on involvement required, as the regional center manages the investment and job creation process.
Drawbacks: Less control over your investment and potentially lower returns. You rely on the regional center’s performance and success, which can be unpredictable.

Choosing the Right Path:

The choice between direct and regional center investment depends on your individual circumstances, risk tolerance, and investment goals.

Here are some factors to consider:

Available capital: Do you have the minimum investment amount required for each option?
Investment experience: Are you comfortable managing your own investment or do you prefer a more passive approach?
Risk tolerance: Are you comfortable with the higher risk associated with direct investment or do you prefer the relative safety of a regional center project?
Timeline: Regional center processing times are generally faster than direct investment applications.

Seeking Professional Guidance:

The EB-5 visa process involves complex regulations and legal considerations. It is highly recommended to consult with an experienced immigration attorney ‍⚖️ who can help you understand the program requirements, assess your eligibility, and choose the path that best suits your needs.

Additional Professionals for Standalone (Direct) EB-5 Applications one may need assistance:

Certified Public Accountant (CPA): Assists with company registration, licenses, and compliance.
Business Plan Expert: Creates a detailed and realistic business plan demonstrating job creation.
Business Lawyer: Drafts company agreements and handles legal matters.
Security Lawyer (if applicable): Addresses complex legal matters if multiple non EB5 partners are involved.
Indian Immigration Lawyer: Assists with Indian documents, source of funds, and interview preparation.

Please note: This blog post is for informational purposes only and should not be considered legal advice. Always consult with a qualified professional for guidance on your specific situation.

To explore your settlement options in the USA, schedule a consultation with Indian immigration lawyer Prashant Ajmera, the founder of Ajmera Law Group. Contact us at +919974253030 or email us at info@ajmeralaw.com. Discover the pathways to your American dream with expert legal guidance.

January 12, 2024

USA EB5 investment and Regional Centers Ownerships

By Prashant Ajmera Business Visa, EB-5 US Investor Visa, Regional Centers, Residency & Citizenship by Investment, USA

**Navigating the New USA EB-5 Landscape: Understanding Regional Center Ownership Models**

The recent changes to the EB-5 program have brought about significant protections for investors, but caution is still advised. Understanding the ownership models of Regional Centers (RC) is crucial, as it plays a pivotal role in the success and compliance of EB-5 projects.

**1. Developer-Owned RCs:**

– Leading developers or business owners establish their RCs to raise funds for their projects. This model provides direct control but demands a deep understanding of the EB-5 process and compliance requirements.

**2. Financial Intermediaries:**

– Finance companies, commercial mortgage brokers, or broker-dealers may seek RC approval to raise funds for small to medium-sized businesses or developers. They can either establish their RC or rent an existing one.

**3. EB-5 Marketing Companies:**

– Marketing companies secure approval for multiple RCs and lease or license them to developers seeking funding. They also offer fund-raising services for smaller entities. However, this model, especially under the new regulations, presents unique challenges.

Under the revised EB-5 rules, USCIS has taken over the approval process for RCs, eliminating the involvement of state governments. The shift aims to bolster the integrity of the program. The three ownership models, particularly the third, now face heightened compliance requirements from both USCIS and the Securities and Exchange Commission (SEC).

While the first two models may navigate these changes more easily, the third model—leasing or licensing RCs—poses significant risks. Compliance requirements under the new rules demand a meticulous understanding of the EB-5 process, making it challenging for companies solely relying on RC licenses to meet these standards.

Our law office has encountered cases highlighting the unprofessional practices within this model. Educated and sophisticated investors find themselves at a loss, uncertain about their investments due to inadequate guidance from lawyers, developers, and RCs.

Industry experts share our concern, emphasizing that maintaining an RC solely for licensing may not be economically viable unless managing large or multiple projects within one RC. Recent USCIS data supports this observation, with a minimal number of RC renewals and a sparse project count.

In essence, the evolving EB-5 landscape urges investors, developers, and regional centers to exercise due diligence. Understanding the intricacies of the new regulations is vital for successful and compliant participation in the EB-5 program.

*Disclaimer: This information is not legal advice, and individuals are encouraged to seek professional counsel for their specific circumstances.*

January 7, 2024

Is USA EB-5 investment at Risk?

By Prashant Ajmera Business Visa, Green Card, L1 A & B Visa, Regional Centers, US Immigration attorney, US Immigration Lawyer

“Navigating EB-5 Investments: Ensuring the Safety of Your Capital”

Introduction:

The EB-5 Immigrant Investor Program offers a pathway to obtaining a U.S. Green Card by making a qualified investment in a new commercial enterprise. While this program provides an excellent opportunity for foreign investors, it’s crucial to understand the intricacies and risks associated with EB-5 investments. This blog aims to shed light on the safety of EB-5 investments and guide investors on mitigating business risks.

EB-5 Investment Criteria:

1. **New Commercial Enterprise:**
– Established after Nov. 29, 1990, or restructured before this date.
– Involves purchasing and restructuring an existing business or expanding it by at least 40%.

A new commercial enterprise is defined as any for-profit activity formed for the ongoing conduct of lawful business.

2. **10 Job Creation Requirements:**
– EB-5 investors must invest in a new commercial enterprise that creates full-time positions for at least 10 qualifying employees.

3. **Capital Investment Requirements:**
– Capital includes cash and tangible assets owned and controlled by the investor.
– Excludes assets acquired unlawfully, investments with guaranteed returns, or investments subject to repayment agreements.

Navigating Business Risks:

Investing in any business, whether in the USA or elsewhere, involves inherent risks. The key for EB-5 investors is to minimize these risks through due diligence and professional assistance. Here are essential considerations:

1. **Due Diligence:**
– Conduct a thorough analysis of the business, industry, and market conditions.
– Evaluate the business plan and financial projections for viability.
– Assess the management team’s expertise and track record.

2. **Professional Guidance:**
– Seek assistance from experienced professionals, including legal and financial advisors.
– Consider hiring experts who specialize in EB-5 investments and understand the nuances of U.S. immigration law.

3. **Risk Mitigation Strategies:**
– Consider making investments in businesses or regional centers with a proven, long-standing track record of success.
– Stay informed about changes in U.S. immigration policies and regulations.

– Avoid making investment decisions on projects solely based on shorter processing times.

Conclusion:

While the EB-5 program offers a unique opportunity for foreign investors, understanding and mitigating business risks is paramount.

By conducting due diligence, seeking professional guidance, and implementing risk mitigation strategies, EB-5 investors can enhance the safety of their capital.

Making informed decisions will not only safeguard investments but also contribute to the success of the EB-5 journey.

To explore your settlement options in the USA, schedule a consultation with Indian immigration lawyer Prashant Ajmera, the founder of Ajmera Law Group. Contact us at +919974253030 or email us at info@ajmeralaw.com. Discover the pathways to your American dream with expert legal guidance.

August 8, 2023

Is it possible to make an EB-5 investment of US$ 500,000 and loan US$ 300,000 to secure my US Green card?

By Prashant Ajmera EB-5 US Investor Visa, Investor Visa, Regional Centers, Residency & Citizenship by Investment, US Immigration attorney, US Immigration Lawyer, USA, USA Student Visa

Is it possible to make an EB-5 investment of US$ 500,000 and take
loan of US$ 300,000 to secure my US Green card?

As of March 15, 2022, the EB-5 immigrant investor program now requires a higher investment amount of US$ 800,000, which represents a 60% increase from the previous US$ 500,000. This significant rise in investment may pose challenges for many potential investors who might find it difficult to come up with such liquidity to participate in the program and invest in the USA.

However, there is a favorable development for EB-5 investors from a US court decision in November 2018. This decision allows investors to borrow money without having to provide personal collateral or pledge personal assets as security for the loan.

This can be done in two ways:

(I) Investors can seek loans from regulated financial institutions, either in the USA or anywhere in the world, that are willing to lend money with or without requiring collateral. These institutions could be banks or other licensed entities under the local regulatory authority.

(II) Alternatively, investors can receive loans from friends or relatives, which can be used for their EB-5 investment. However, it is important to note that the USCIS may request source of funds documentation from the friend or relative providing the loan.

The EB-5 immigrant investor category has three main requirements:

(i) an investment of capital,

(ii) engagement in a new commercial enterprise, and

(ii) job creation.

Several regional centers offer loans of up to US$ 300,000 without the need for collateral or security.

However, investors should exercise caution and consider the following points:

(i) Repayment terms of the loan,
(ii) Interest rates charged to the investors,
(iii) Duration of the loan,
(iv) The licensing status of the company providing the loan.

According to the USCIS regulations, gifted or borrowed funds are permissible for petitions filed on or after May 14, 2022, as long as they were given or loaned in good faith and not to circumvent limitations on permissible sources of capital, including proceeds from illegal activities.

Investors relying on such funds must demonstrate the lawful source of the funds by providing evidence for the donor or lender (if not a bank).

It is essential for investors to carefully review the loan or mortgage documents, the lender, and their source of funds, especially if the lender is not a bank.

Being thorough and compliant with USCIS regulations regarding the source of funds will help ensure a successful EB-5 investment process.

It is crucial for investors to be aware of past instances where regional centers offered similar investment structures, such as requiring a smaller investment amount with the rest in the form of a promissory note.

Around 1995, there was a case where investors followed such a structure, with a US$ 150,000 investment and US$ 350,000 in promissory notes. However, this approach was deemed unacceptable by the USCIS, resulting in the rejection of all EB-5 applications associated with it. Read more

Additionally, as a consequence of this improper practice, two officers of the Regional Centres involved in the scheme were charged and sentenced. Furthermore, the EB-5 program itself was temporarily suspended due to these issues.

This historical example highlights the importance of adhering to the regulations and guidelines set forth by the USCIS when participating in the EB-5 program.

Investors should exercise caution and ensure that their investments and funding sources comply with the program’s requirements to avoid legal issues and /or denial of the EB5 petition.

Transparency and compliance with USCIS guidelines are crucial to ensure the success of the EB-5 investment and secure the USA Green Card with the family.

The author of this article/blog is Prashant Ajmera, an Indian immigration lawyer and the founder of Ajmera Law Group. He has been a Canadian citizen for the past 30 years and is also the author of two books: “Millionaire of the Move” and “How to Plan for Your Child’s Foreign Education: Myth vs. Reality”. He has been assisting and advising Indian businessmen to establish businesses in Canada since 1993. Consult us

July 25, 2022

Investing in EB-5 as Equity, Debt, Fund or Mutual Fund – Which is the Best Option?

By Prashant Ajmera EB-5 US Investor Visa, Investor Visa, Regional Centers, Residency & Citizenship by Investment, Second Passport, US Immigration attorney, US Immigration Lawyer, US start up visa program

Understanding Investing in EB-5 and different financial structures?

The pathway to USA Green Card by investment, also popularly known as the EB-5 investment visa program, is considered the easiest and safest way to obtain a Green Card. The law behind the EB-5 investor program is very simple but the creative financial structures set up by investors and related professionals make investing in EB-5 look like a very complex process.

The simple EB-5 law

An EB-5 investor may make an investment of US$ 800,000 in a new commercial enterprise / new business which will create 10 new jobs provided the business is located in a rural area or high unemployment area or the project is an infrastructure project. In all other cases, the investment amount shall be US$ 1,050,000.
The investment should be a business risk.
The investment amount should come from a legitimate source, including earned money or a loan, or a gift.

This simple EB-5 regulation has been converted into complex financial structures, making the investment process seem very complicated for investors.

Here are the direct and indirect EB-5 investment scenarios:

Direct Investment

An investor can start on his own or partner with someone in the USA for a new business located anywhere in the USA, make an investment of US$ 1,050,000 and create 10 jobs. The investor will then qualify for a visa under the EB5 program. If this business is located in a rural area or high unemployment area, the investment amount will be US$ 800,000.

Investors who are capable of operating and managing a business may opt for this type of direct investment.

Indirect investment

In this case, several geographical areas in the USA may be combined and approval from USCIS is obtained to declare the area as a Regional Centre.

It is under this type of indirect investment, various financial structures are offered to investors for making an investment.

Here are some simple examples:

EB-5 Equity investments

A developer in the USA approaches USCIS to receive permission to declare a certain geographical area of the USA as a regional center. The developer then starts his project in this area and uses the EB-5 program to raise funds. The project will also be financed by a bank loan and the developer’s equity in the regional center as well.

In this type of project, the developer invites investors to make an investment as equity or as preferred equity partners.

Very few developers in the USA use this model. In such cases, there is one project and one developer.

EB-5 Debt model

A company raising funds for a business or project in the USA may approach USCIS to receive permission to declare a certain geographical area of the USA as a regional center.

Once the area is declared a regional center, the company may approach developers or businesses to set up a project there.

Rather than making a direct investment in the project company, in this case, a second company is created in which EB-5 investors make an investment as equity partners. This company then gives a loan to the project company to carry forward the project. Hence this is known as the Debt model.

This is the most popular model for EB-5 investment.

It is interesting to note that US companies assisting to raise funds for US developers or businesses also undertake marketing for EB-5 projects outside of the USA to attract EB-5 investors.

In this case, too there is one project and one developer but there is also an intermediary company, such as a fundraising company and/or EB-5 marketing company.

EB-5 Fund / Mutual Fund model

A company raising funds for a business or project in the USA may approach USCIS to receive permission to declare a certain geographical area of the USA as a regional center or the company may rent a regional center from another company who has already received approval from USCIS for a regional center.

Once the area is declared a regional center, the company may approach several developers or businesses to set up a project there.

The EB-5 fund may be created for just one project or business or several projects or businesses in a regional center.

Using EB-5 funds for several projects reduces the risk by diversifying the portfolio as in the case of regular mutual funds in financial markets.

This model is used by very few companies in the USA.

To protect EB-5 investors, the US government has introduced the new EB-5 Reform and Integrity Act. Thanks to this new regulation, we may see a major shift in the EB-5 marketplace. Many companies marketing EB-5 projects or raising funds or renting regional centers may face financial viability issues due to a long list of compliance requirements.

Depending on your personal aptitude, investors may decide to invest in EB-5 to receive a USA green card.

Legal disclaimer:

This blog is written in a very simplified manner for the purpose of making investors understand the various models related to EB-5 investment. Investors are advised to consult a qualified US immigration lawyer before making any decision regarding an EB-5 investment.

For Indian investors – Investing in an EB-5 visa from India is a legal matter and as per Indian law, only Indian lawyers having expertise in the EB-5 program must be consulted.

February 10, 2019

What Question investor should asked for EB-5 investment?

By Ajmera Law Group EB-5 US Investor Visa, Green Card, Investor Visa, Regional Centers, Residency & Citizenship by Investment, USA

How to select your EB-5 project and make a safe investment in the EB-5 project?

Regional Centers, Broker dealer, Agent, and mortgage broker who is showing you EB-5 project, you should ask the following questions.

What year was the Regional Center first approved by USCIS?
How many EB5 projects have the Regional Center completed?
How many I-526 and I-829 approvals obtained by the investors in the Regional Center.
May I have a copy of the PPM _ Private Placement Memorandum) so I can review the credit agreements for the senior bank loan and the other loans?
Is it true that the EB-5 loan is the last loan to be repaid because the Senior Bank Loan will be paid first?
Does the EB-5 loan have a security interest in real estate or in the assets of the developer or Regional Center?
May I have a copy of the EB-5 insurance policy? Does the policy cover the 3 primary reasons for application denial: fraudulent statements, criminal background and source of funds issues?
If the project doesn’t sell as quickly as expected, could the EB-5 loan be extended beyond 5 years?
If the project sells for 15% less than expected, could I lose all or a portion of my investment?
Where is the money coming from to pay the interest on the bank loan?
Does the Fund provide the letter from the senior bank loan and the private loan as well as the Targeted Economic Area?

Find out these answers and consult our law firm to compare answers with Regional centers we work with and answer provided by them to these questions.

Email: prashant@ajmeralaw.com

July 28, 2018

Simplifying the EB-5 Program – Investing in EB-5 business as a debt, equity partner or in the fund?

By Ajmera Law Group Citizenship, EB-5 US Investor Visa, Green Card, Regional Centers, Residency & Citizenship by Investment

Of late a large number of regional centers have entered into the EB-5 market, offering a variety of investment choices to investors. This has resulted in investors becoming more and more confused regarding the most appropriate investment option most suitable to their needs and long term goals.

I regularly meet clients who have a very sound financial background, yet are completely lost when choosing the right EB-5 investment.

Here are the three most common offerings in the EB-5 market at present:

DEBT Model:

98% of the offering in the EB-5 market is using this model. This model involves three entities:

(i) The company who has been granted the ‘Regional Center(RC)’ approval

(ii) The developers who have incorporated a company or LLP -1 for the project, and

(iii) Another LLP-2 which is used as an investment vehicle for EB-5 purposes.

As an investor, you will be making investment in LLP-2 which will loan fund to LLP-1. In return, LLP-1 will give credit for all jobs created in the project to LLP-2so as to meet the mandatory ‘Creation of 10 jobs’ requirement of the EB-5 program.

Investment is generally made for a period of 5 years and at the end of 5 years, the capital is returned to the investor by taking a second mortgage.

LLP-1 also offers interest to EB-5 investors which can be in the range of 1%-4% per annum. Ideally, if all these three entities are managed by one single developer company, then this particular EB-5 project can be considered a good selection.

However, in reality, we see that RC approval is obtained by one entity, which then seeks out a developer to develop the project and an entirely different third company is involved in marketing the project. If you do adequate research you will find that there are very few developers who are directly involved in the marketing of their project.

In these type of projects, the local banks havethe first claim, promoters have second claim and EB-5 investors have the last claim to receive any money in the event of project failure.

EQUITY Model:

Very few companies are currently offering the equity option for EB-5 investment. In this model, only one company or LLP is created by developers of the project and EB-5 investors are required to make an investment in this particular LLP only. EB-5 investors give the managing rights to the developers. In this model, the investors are not given any fixed returns but are offered a percentage of the profits as and when the project becomes profitable, while the developers take only a small portion of the profit.

In this model, the risks are higher but returns can be as high as 10%-12% per annum. Some of the hotel projects for which our law firm has raised EB-5 investment capital were based on this model and have consistently given good returns.

In many EB-5 projects, there are no loans from local banks or lenders except bridge loans. Because of this, the properties are mortgage-free right from day one and chances of failureare very low,while those of good returnsare very high.

In case the project fails, the capital can be distributed amongst all the EB-5 investors as compensation since there is only one class of investors.

FUND Model:

Quite a few RCs are offering this model now. In first two options, there is one project and one company or LLP. In the Fund model, a fund of a certain predetermined amount is created to loan money to several projects and hence the risk is distributed equally among several projects. An annual fixed return is given to investors which can be in the range of 1%-3%.

Simply put, the first model can be compared to a debenture, the second one to a share investment and the third one to a mutual fund investment. Each model has its own pros and cons. However,the bottom line is that a viable EB-5 project must have good developers who have a successful track record in non-EBB and EB-5 project development.

This article outlines very general information regarding EB-5 investment options for the sole purpose of easy understanding for investors at large. Each investor must seek appropriate legal advice and consult their financial advisers before making any kind of the investment.

July 10, 2018

Doing business or Investing in USA – EB-5 – L1 – EB-1 (c) or E2 visa

By Ajmera Law Group EB-5 US Investor Visa, Green Card, Investor Visa, Regional Centers, Residency & Citizenship by Investment

Doing business or Investing in USA: Nine different options for Indian businessman

This is a very simple way to explain, how one can make an investment in the USA or do business in and with the USA.

Simple export of goods and services to USA consumer or business.
Making an investment into an existing business, land building, or farming land and become partner/investment. You do not any visa of the USA and you don’t get any visa by just making a simple investment.
Purchase of Real estate in the USA – any type of visa not possible but can take benefit of rental income and capital gain.
Register a company in the USA, open an office in the USA, a bank account in the USA in person, hire local people to run the business. No Person is transferred from India to the USA.
Register a new company in the USA, open a subsidiary office in the USA, a bank account in the USA, hire local people to run the business with a definite business plan and KEY PERSON(S) IS TRANSFERRED from India to the USA. This is an L1 visa. A person is a senior executive and Technical Person to be transferred from the USA. The American company will be a subsidiary of the Indian company.
Indian company taking over 51% of the USA company and by join venture, Indian CEO or Key technical person transferred to the USA under EB-1-C Visa class.
Starting a NEW business in the USA, hire 10 people and make an investment of 1 million US$ and investor, his spouse and children under 21 can get a green card of USA. – This is an EB-5 direct investment.
Starting a NEW business in the USA, hire 10 people and make an investment of 1/2 million US$ and investor, his spouse and children under 21 can get a green card of USA. This business must be in an area where there is high unemployment or a population is less than 20,000. This is EB-5 under the Regional center class.
You make an investment in Real Estate and become a citizen of another country like Grenada, Turkey, Canada and then apply for an E2 business visa of the USA to do business in the USA.

December 5, 2017

EB-5 USA Green card – Investment as Debt or Equity or Fund?

By Ajmera Law Group EB-5 US Investor Visa, Green Card, Investor Visa, Regional Centers, Residency & Citizenship by Investment

USA green card by investment – EB-5 Visa:

Investment can be made as Debt or Equity or Fund

The EB-5 Visa provides the most flexible path to a Green card and is based on investment in the US. The EB-5 Visa does not require the applicant to manage the day-to-day affairs of a business. One may invest in an existing business or a new business. More than one person may invest in the same business. The EB-5 investor may be a minority owner of the business.

One may qualify for an EB-5 Visa by:

Investing One million dollars and hiring ten employees anywhere in the USA.
Investing $500,000 US and hiring ten employees in an area where the unemployment rate exceeds the national average unemployment rate by 150%.
Investing in a regional center.

The INS has designated specific areas, called Regional Centres, as eligible to receive immigrant investor capital. The INS has approved over 520 Regional Centres. Regional Centre investors may rely on indirect job creation rather than directly hiring ten employees. A competent professional, such as an economist, must quantify the indirect employment. If the regional center is in a high unemployment area, the required capital is reduced to $500,000 US. Presently there are projects underway in many regional centers whereby making an investment of $500,000 in a limited partnership can qualify an individual for applying for a green card through the USA EB-5 investor program.

Out of the 10,000 Investor visas (EB-5 Visas) available annually, 5,000 have been set aside for those who apply under a pilot program involving an INS-designated “Regional Centre” To date, this quota has not been exceeded.

EB-5 investors include people from all walks of life – professionals, business people, persons wanting to facilitate a child’s education, and retirees. Because the EB-5 Visa permits employment in the US, many EB-5 investors become involved in charity or part-time work. Simply put, the EB-5 visa gives you the flexibility to do what you want in the USA.

Our firm has identified several regional centers that offer investment as Debt which is a loan to a business, Equity in which investor is a partner in the business, or Fund investment in which fund is created to loan several businesses and risk is minimized.

Make an investment in the EB-5 project with confidence.

Do not do an analysis of the EB-5 project but find the right immigration lawyer in India and the USA who can assist you to navigate the whole process of EB-5.

Prashant Ajmera & Associates

Category Archives: Regional Centers