Direct vs. Regional Center Investment

The Difference Between Direct EB-5 Investments vs. Regional Center Sponsored Projects

It is possible for companies to accept EB-5 investments directly without working through a regional center. However, according to the U.S. Citizenship and Immigration Services (USCIS), approximately 95% of investors utilizing the EB-5 program choose to go through a regional center. The reason is the numerous benefits for both the investors and the companies when working with an USCIS approved regional center.

For companies, facilitating the EB-5 investment through a regional center allows the company’s management team to maintain its focus on growing the business. Additionally the North Dakota/Minnesota EB-5 Regional Center already has a pre-established network of international partners and agents to help find investors.

For investors, the North Dakota/Minnesota EB-5 Regional Center qualifies for expedited petition review based on its non-profit status. More importantly, investing through the North Dakota/Minnesota EB-5 Regional Center helps assure the investor thorough due diligence has been conducted on the project and that it meets the requirements set forth by the USCIS.

The EB-5 requirements for both methods are essentially the same, except when working with a regional center the USCIS is less restrictive on the job creation and the daily involvement in the project for the EB-5 investors is less burdensome.

Job Creation:
The biggest advantage of a regional center, rather than direct EB-5 investment, is the job creation requirements.  Direct EB-5 investments are required to create 10 direct jobs. Projects working with a regional center are still required to create 10 jobs per investor; however, they can count direct, indirect, and induced jobs. Either the RIMS II or IMPLAN econometric analysis models are used to calculate indirect and induced job creation.

Management:
Less involvement is required in the day-to-day operations of the project for EB-5 investors working with a regional center. Investors are able to take a passive role in the company they are investing in, similar to that of a limited partner.  When individuals invest directly into a project, they are required by USCIS to take a more active role in business operations, often times having a voting seat on the board of directors, and/or holding a key management position.