Direct Investment vs. Regional Centers
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.
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.
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.