Today’s real estate world has begun to bounce back and development around the United States is increasing. Builders are on the move for more creative sources of funding and firms want to find different ways of raising money, other than the popular forms of tax credit lending and the use of mezzanine funding.
The EB-5 Investor Visa Program is one alternative method of raising funds that has recently become more popular in the last few years. Under the Immigration Act of 1990, the EB-5 Program is a way for foreign investors to gain conditional residency in the United States by investing in an American business or Regional Center. This program is administered by the United States Citizenship and Immigration Services (USCIS) and EB-5 is an abbreviation for Employment-Based Immigration: Fifth Preference. EB-5 has recently been a valuable option for those wishing to raise funds for real estate development and real estate projects using EB-5 funds are typically conducted through an EB-5 Regional Center.
A Regional Center is a public or a private body that is designated by USCIS to oversee EB-5 projects. Regional Centers are also involved in job creation, improving the productivity of specific regions, increasing domestic capital and promoting economic growth. Most of EB-5 investment (90-95%) is conducted through Regional Centers.
Developers wishing to secure funds through EB-5 investments should keep in mind that Regional Centers are designated by the USCIS, and thus, EB-5 projects take a long time to be approved. Also, raising funds from the investments may take from nine to twelve months due to time needed for review of the investors and the business plan for the project. Additional time will be needed for other steps of the process, including agreement between the Regional Center and the project, overseas marketing of the project, the processing of the applications for the investors’ visas, securing the investment and more.
Developers should be sure that using EB-5 funds for their project will be cost effective in the long run. For example, a smaller project may not benefit from the use of EB-5 funds because of the extra costs and time constraints the project will face. However, many larger development projects may benefit from the use of EB-5 investment. First of all, EB-5 investment can be used in any type of development project, including office buildings, hotels, industrial, and multi-family projects. Additionally, EB-5 Program is also an option for diversifying a project’s capital and projects will profit from lower-interest rates on loans through EB-5 because the investment may be made in the form of equity or a loan. Most likely, a larger project is better suited for the use of EB-5 investments.
After making the investment, the investor, their spouse and their unmarried children under the age of 21-years-old will receive conditional green cards for two years. If the creation of ten jobs is approved by USCIS at the end of the two years, the investor and his or her family may be eligible for permanent residence and many investors go on to obtain full citizenship in the United States.
For more information and a directory of EB-5 attorneys, visit EB5Investors.com