Frequently Asked Questions - Direct, Individual EB-5 Cases

The first thing you have to determine or ascertain is whether the U.S. business qualifies as a TEA area. This is sometimes not an easy thing to do but is important, because if it's a TEA, then only $500,000 USD investment need to be made. However, this might sound good in theory, but in practice, $500,000 USD investment may not be sufficient to start or purchase a business and also create 10 new, full-time jobs that will not lose money for you.

Here is a general checklist:

1. Does the business qualify as a new commercial enterprise?

2. Does the business qualify as a TEA?

3. Can the business create 10 new, full-time jobs, not including myself and my family?

4. Will my fund qualify as lawful source?

No, all jobs have to be created directly in a direct, individual EB-5 case.

This question was answered by USCIS. See below link.

http://eb-5center.com/node/517

This means even if your previous investment was for E-2 visa purpose, as long as you meet the requisite investment amount and new job-creation, you should be able to meet the EB-5 requirements.

No, for two reasons. First, just buying a real estate and holding it is not considered to be a commercial activity. Second, how are you going to create 10 new, full-time positions through such investment?

However, if you purchased a shopping center or a golf course and added 10 new, full-time jobs within 2 years, then, yes, no problem.

Yes, as long as the business was established after November 29, 1990. But you have to remember that you cannot just take over the existing employees and meet the requirement to create 10 new, full-time positions, not including yourself and your family members.

You used to not be able to invest in an existing U.S. business to meet the requirement to establish a new commercial enterprise, but several years ago, the EB-5 law was changed to allow this, as long as the business was legally formed after November 29, 1990. See below link for USCIS' clear position on this issue:

http://eb-5center.com/node/160

Generally speaking, here are advantages of direct, individual EB-5 case over a regional center based EB-5 case.

1. You have more control (and responsibility) over the direction of the U.S. business which acts as a new commercial enterprise.

2. You can make a lot of money if the business does well.

3. You can decide when to fold or sell your interest in the business.

4. You can invest in an existing business, as long as job-creation requirement is met.

5. You can be more nimble and try to find an alternate solution when something goes wrong.

What are disadvantages of direct, individual EB-5 case compared to a regional center based EB-5 case?

1. You need to spend more time and effort on the operation of the business.

2. You need to take on associated potential liabilities of owning any business.

3. You have to also focus on keeping paper based evidences of job creation.

4. All jobs have to be created directly, and indirectly-created jobs or induced jobs cannot count. This is perhaps the biggest disadvantage of a direct, individual EB-5 case.

5. Your investment amount may well exceed $1 MM when running your own business.

6. If business fails, you can lose all your money.

Ultimately, the differences between the two types of EB-5 cases can be explained using an analogy of driving yourself on a trip or using Greyhound to get there. If you are a good driver, you have more freedom to take your business to a direction you want, but you have to be the driver and paying attention all the time.

We would say that a direct, individual EB -5 case is something you should consider only if you are competent in English language, U.S. business practices and willing to put in a lot of time and effort staying in the location of where you made your investment, and you are really motivated to own and operate your own U.S. business.

Yes, unlike an E-2 visa case, you can be a minority interest holder or owner of a U.S. business. For example, you can own and operate a U.S. business as a 10% owner, along with a U.S. citizen who owns the remaining 90% interest in the business. The other investor can be green card holder or another alien EB-5 investor also.

This is because for direct, individual EB-5 cases, project documents must also be prepared from scratch, tailored to the needs of the specific case. In addition, the alien EB-5 investor probably has to negotiate through business attorney or another professional many business and investment transactions before a direct, individual EB-5 case can be filed.

For regional center based EB-5 case, all these documents related to the project are pretty much prepared for you by the regional center operator, and all you need to do is focus on the preparation of lawful source documents, after you have done your due diligence and selected a particular regional center based EB-5 project.

There are many business consultants, including commercial realtors and other professionals. Our office does not have a list of U.S. businesses to offer to potential EB-5 investors, although we may refer them to other professionals without incurring any liability.

The first and obvious thing to find out before you make your investment is if any business would qualify as a new commercial enterprise and you will likely be able to meet all EB-5 requirements.

Right at this site (www.eb-5center.com) at:

http://eb-5center.com/direct_eb5

We especially recommend that you review the below site also to get a good grasp of basic concepts of EB-5 requirements.

http://eb-5center.com/easy_eb-5

We also advise, analyze, prepare and process direct, individual EB-5 cases. We would say about 60% ~ 70% of EB-5 law is the same for both direct, individual EB-5 cases and regional center based EB-5 cases; but they differ dramatically on some key requirements.

The answer given would depend on the person answering, but in general, we would say direct, individual EB-5 case takes more work and effort, and is often more difficult to obtain green cards through direct, individual EB-5 case than a regional center based EB-5 case.

The answer does not become clear unless you gain a better understanding of EB-5 law. Suffice to say that according to USCIS, over 85% of all filed EB-5 cases are regional center based EB-5 cases. There is a reason for this. This is not to say that alien investors cannot obtain green cards through direct, individual EB-5 case. It really takes different attitude and effort.

Either depending on whether the new commercial enterprise is located in a Targeted Employment Area (TEA). TEA concept is a separate concept from whether an EB-5 case is a regional center case. TEA determines the amount of investment that needs to be made.

This refers to an EB-5 case where you do not participate through a regional center based EB-5 project, and the alien investor himself makes an investment in a new commercial enterprise by himself or with other U.S. citizen or green card investors or with another alien investors and try to meet the EB-5 requirements.

Sometimes, this type of EB-5 case is also referred to as "direct, individual EB-5 case" or "individual EB-5 case".