EB-5 Direct Investments and its advantages

MAY 24, 2022 11:42:28 PM

The United States has always been a popular destination for businessmen and professionals looking to realise their American dream by establishing a company. The Immigrant Investor Program, also known as EB-5, is the most effective way to realise one’s ambition. The Fifth Employment-Based Preference, also known as the Fifth Employment-Based Preference, is a great way for investors and their immediate families to obtain a green card and become lawful permanent residents of the United States. An investor only needs money to make his or her dream a reality.

Finding the right investment option and navigating the logistics of making the investment that will lead to a US Green Card, on the other hand, is not as simple as it sounds. The first critical choice that an investor must make is whether to invest directly or through an EB-5 Regional Center. Let us explain the key difference between a Direct investment and an investment through a Regional Center.

There are two pathways to EB-5 Immigrant Investor Visa – Direct EB-5 investment requires an investment in a real operating business that results in creation of 10 full-time jobs. A direct investment has been the fastest way to obtain a EB-5 visa. The I-526 approval for a direct investment takes much less time that I-526 filed through a Regional Center takes. A regional center EB-5 investment typically has a 5- to 9-year lock in period. A Direct EB-5 investment, on the other hand, can be withdrawn at any time by the investor.

In the Direct Investment pathway an investor has the option of developing a venture based on their innovative idea or else invest in a real operating business. However, the responsibility of creating and maintaining full-time jobs for qualified employees, that should not include family members, is a challenge.

What are the top benefits of an EB-5 Direct Investment?

Shorter Timelines to Jump Start Business– Investment through a Regional Centre is a simple process because of the infrastructure, which brings in a lot of support for an applicant; however, the ease of investment comes at a significant administrative cost and time. Impervious project pre-approvals to complex lengthy process of application submission, detailed economic reports, and meeting rigorous eligibility requirements, it takes 9 to 12 months to kick start a regional center EB5 project. In so much as Direct EB5 investments enable investors to begin developing, marketing, and seeking external funding almost immediately.

Direct Eb-5 Investment attracts lower administrative fee – Regional Center based investment requires an applicant to pay an administrative fee. Legal fees, project administration fees, and filing fees are few examples. As per USCIS guidelines, the administrative fees are over and above the investment amount, whereas Direct investments allows an investor to keep overhead costs low, save on administrative costs, and devote their entire allocated capital to the launch of the business venture.

Higher Control on Business in a Direct EB-5 investment than in an investment through Regional Centers – EB5 direct investments give the investor more control. Whether they start a new business or buy an existing one, they as investors have the freedom to run it the way they want. Since the investors are involved in running the day-to-day operations directly, they have the freedom to give directions and manage the business directly. On the contrary in an investment through a Regional center the investor has very little control on the business, in most cases, an investor’s power is limited to the ability to vote on major decisions. As a result, if an investor wants to have control over the business, an EB5 direct investment may be the best option.

Potential of higher Returns on Investment (RoI) – A Direct EB-5 investment brings forth limitless earning potentials. Similar to that of a startup or an entrepreneurial venture the earning potential, there are no holds barred in case of Direct EB-5 investments. On the other hand history shows Regional Center investments have shown lower returns and the initial investment have yielded lesser profits. As a result, an EB-5 direct investment may seem more lucrative for an investor

A Summary of the key differences between Eb-5 Direct Investment or Investment through Regional Centers

Advantages	Direct EB-5 Investment	Regional Center EB-5 Investment
Type of Investment	Direct Investment	Indirect Investment
Source of funds	Investor has to provide proof of funds	Investor has to provide proof of funds
Job Creation & No. of Jobs	10 Direct Jobs	Direct/Indirect jobs, based on the formula created by the Regional Center for a particular industry
Ownership	Investor owns equity	Investor gives a loan for 5 years with an exit option
Management	Investor manages the company	Regional Center appoints a a management company
Control	Investor has full control over the project	Investor is one of the many investors in the project. Hence has minimum control
Experience	Investor must be experienced to operate the business in the opted industry	Investor does not need to have any experience in the project or the industry
Time Lines	12 to 18 months	18 to 24 months
Return on Investment	Investor get higher rate of return owing to direct management and control	Investor lower rate of return due to low risks in projects

 

Finally, prospective EB5 investors can choose to invest in an EB5 regional center or make an EB5 direct investment. The selection of an option is primarily determined by the key goals that an investor wishes to achieve as well as the circumstances at the time of investment. However, making an EB5 direct investment is more advantageous for investors seeking greater control and higher returns on investments.

To Know more about the Application Process and your Eligibility

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