The EB-5 program is congressionally mandated and has been in existence since 1990. Congress intended the program to create jobs for Americans and stimulate investment, at the rate of ten direct jobs per investor family.
Subsequently, a Pilot Program which created the Regional Center concept was passed into law.
The regional center pilot program allows U.S. sponsors to create investment opportunities in which the investor could place their funds. The benefit of this investment opportunity is that the job creation component would become the responsibility of the Regional Center sponsor instead of investors.
In this case, the law allows the sponsor to create ten jobs directly and indirectly within a prescribed geographic area known as census tracts.
The word „directly‟ implies that the U.S. employee hired by the Regional Center will be working full time for 35 hours per week and that a W2 form, demonstrating the employee‟s income, will be filed with the Internal Revenue Service.
The word „indirect‟ or „induced‟ refers to those jobs which are „deemed‟ to have been created in the community as a direct stimulus result of the new Regional Center.
All businesses must have been created after 1990. Thus, while each investor family must generate ten jobs for US residents or citizens, the direct and indirect jobs may be combined in order to meet the requisite total. The job creation component is established pursuant to an economic model which is developed by qualified economists and submitted to the United States Citizenship and Immigration Service (USCIS) as part of the application for regional center designation.
It is clear that the EB-5 program has had a checkered history, among which there were minor setbacks along the way. However, through legislation enacted in 2001, Congress demonstrated that it wanted to ensure the preservation of the EB-5 program through an increased structural approach. Since then, the program has demonstrated a greater level of security, although the program does require, intrinsically, that each investment carry an investment „risk‟.
What is this risk? First, the investor must assess and determine the financial risk of the project. Second, he must ensure that the documentation and approvals at both the USCIS and consular levels are met. Third, initially the investor will only be receiving a two year conditional residency.
Ultimately, this will translate into permanent residency status only when the sponsor creates the project and can prove that the jobs necessary to the lifting of the conditional status have been created (a total of ten direct and indirect jobs per investor).
That being said, the future of the EB 5 program is very promising. An increasing amount of people are aware of its existence, its utility, and its benefits. The number of investors signing up with responsible and viable regional centers is continuing to grow as they view the program as a fast track to US residency wrapped in a valuable investment.
More politicians and economic development officers understand the nuances of the program which has now created thousands of jobs and generated billions of dollars into the US economy.
The eb5 pilot program is a logical and natural win/win platform for the U.S. economy, U.S. sponsors, and foreign investors.